Losing a Job Now Could Mean Losing a Home
A house is all Amanda Auge wanted for her daughter Jasmine. But now she's lost her job and her southern California home has lost half its value - dropping from $395,000 to $180,000. Foreclosure seems like a foregone conclusion.
"It's very depressing," Amanda Auge told CBS News correspondent Ben Tracy. "I want help; you know we are trying the best we can. I'm doing everything I can to get help."
Amanda's original mortgage payment was nearly $3,000 dollars. This month she paid $600.
"I'm making the payments because that is what I can afford," she said. "We want to show good faith and pay down our loan."
Amanda is not alone. The current wave of foreclosures is hitting once-stable homeowners who are no longer able to pay their mortgage because they aren't getting a paycheck.
"People are losing their jobs and unable to make mortgage payments on what had been considered very safe, standard 30-year fixed prime rate loans," said Rick Sharga, senior VP of RealtyTrac.
U.S. Foreclosures Up 15% Since January
In fact, in the first half of this year, one in every 16 homes in Nevada received a foreclosure notice - a 61 percent jump from last year. In Arizona, it was one in every 30 homes (up 54%); in Florida, one in every 33 (up 42%); and in California, one in every 34 (up 15%).
So some banks are holding loan modification fairs, lowering interest rates and principal to make mortgages more affordable.
"We are definitely seeing better quality and more loan modifications," said Guy Cecala of Inside Mortgage Finance. "That's the good news. But the bad news is that they are not keeping pace with foreclosures."
President Obama's highly touted program launched in February has helped 325,000 borrowers, but more than 3 million households are expected to be in foreclosure this year. The loan modification process is often a mess; banks say they are overwhelmed and paperwork is often lost.
Amanda Auge has been waiting eight months for an answer on her modification. With a baby on the way, she's worried.
"If they foreclose on us and I'm 9 months pregnant, what do I do?" she said.
Unfortunately, many experts say the only way the foreclosure problem will truly be solved is when most of the borrowers actually facing foreclosure lose their homes. A tough reality check.