Foreclosures Outpacing Mortgage Changes

(CBS)  Jeff and Shari Lee knew they'd have trouble meeting their mortgage payments when his business, installing granite counters, started slowing last year. But 18 months later, they're still waiting for a permanent loan modification.

"It was a joke," Jeff Lee said. "It was a shuffle you just got put from one person to the next. You just couldn't get any answers from anybody."

The process has taken so long, the Lees are now in foreclosure.

"It's a huge failure," said attorney Gene Melchionne.

Melchionne said he has a dozen clients who need mortgage modifications but can't get them.

"The people handling the paperwork don't seem to know one month to the next what they are doing," Melchionne said. "It's just chaos."

The government's $50 billion program to help homeowners can't keep up with the growing crisis, says a new Congressional Oversight Panel report, with foreclosures now outpacing modifications by two to one, reports CBS News correspondent Anthony Mason.

"We're bailing it out, but the boats taking on water faster than we can bail," said Elizabeth Warren, with the Congressional Oversight Panel.

Warren said the government's plan was designed only to attack the subprime problem.

"Now what we have is a crisis that's hit prime mortgages, one that's largely driven by unemployment," Warren said.

At this pace, the Federal Housing Administration, which backs more than 20 percent of all new mortgages, may need a multibillion-dollar bailout.

"I think the problem is going to be very intense over the next six to 12 months, particularly as unemployment continues to increase and housing values remain under pressure," said Mark Zandi, a chief economist and cofounder of Moody's Economy.com. "I think foreclosures are going to be a problem for us well into 2011 and 12."

The oversight panel urged the Treasury to expand its program. It's estimated another 3.5 million homes could go into foreclosure by the end of next year.

[newsworthy8]

Does anyone know where a retired person who worked all his life, supported his family, moved when he had to work, paid his mortgage on time, paid for his health care, never took food stamps, was't afraid to go to good will for work clothes, went to church and tithed the best he could, donated to certain charities, is white, so I guess he is a minority!!the question is, where do I go for help so I don't have to be responsible for my responsibilities..does anyone know???

[bubbadubba]

I think the banks should continue to increase interest rates even more don't you?
I'm thinking 15% on mortgages would get the job done and take all the houses.
There are still a few homeowners out there and only the wealthy should own homes, everyone else should rent from them for the rest of their life like the serfs of the middle ages.
The plan is working!

[trueblueusa]

The Class action suit against " Chase Home Finance "
WILL Be an Eye Opener !
White Collar Crime !!!!! Believe It !!!

[zebra8835]

The real issue? Home prices are WAY too high! A two bedroom "dog house" in California is half a million dollars. When the housing market collapses, the prices will come back to reality and the homes will sell again. As another blogger pointed out, interest rates are great! they're lower than they have ever been. Too many employees that have been laid are taking jobs out of desperation at $8 to $12 an hour. These jobs will not support a family, buy a home or replace a car.

[nojoy01]

by Void_Master October 11, 2009 8:43 AM EDT
by zebra8835 October 10, 2009 10:44 PM EDT

Too many employees that have been laid are taking jobs...

***

I'm pretty sure that's a typo, but that's the funniest damn thing I've read on this board in a long time
------------------------------------------------------------------------
Typo or not, if you think about what businesses have been doing to their employees lately, it makes perfect sense. :))

[s0055d-2009]

The government, in it's infinite wisdom, chose to do nothing when the mortgage Ponzi schemes were causing people to pay far too much for housing. Now it is pulling out all stops to save the guilty at the expense of the innocent. They cannot fix this now, it's too late. Government and Federal Reserve policies have cost me over $12000 in lost investment income by their actions. As far as I'm concerned, they're stealing from me to protect these idiots from their own stupidity!

[rhs648]

So now lets put the government in charge of health care. Should we expect a similar or a different result? Is your position the same on health care or is it different?

[curse914]

@rhs648, you are comparing Apples and Oranges. Regulation by the government could have corrected the obvious bubble that was being created, so you are very confused. But the problem is, Housing is our only "industry". Regulation would have put the breaks on our economy back in 2001.

[wmsshields]

Let me make this perfectly clear. This whole "housing bubble" was created by democrats. Under Carter, they passed the "Community Reinvestment Act" which forced banks to loan to people who could not get conventional loans. Then Clinton strengthened the act, threatening banks with fines if they did not make unconventional loans to even more folks who could not afford to make payments. Then these borrowers began to default -- imagine that! Fannie and Freddie were buying these loans from the lending banks, under the guidance of Barney Frank among others. Then when the bubble burst Frank shrieked that he would find out who was responsible and pointed the finger at bankers. This is history; before you ridicule me for going all the way back to Carter, look it up. The dems, trying to buy votes for their party, forced banks to make loans to people who would never be able to afford to pay them back. It's the facts, Jack.

[curse914]

Conservatives need to fact check their Hero Rushboo The Pill Popping Primate.


Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.

Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.

Federal Reserve Board data show that:

* More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

* Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

* Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

[midlclass]

lets see if you bought a house under carter 30 years ago the loan should be paid off even under clinton it would of been paid on for 9-to 17 years most of the forclosers have happen in the last 2 years 1 year for you to get behind another for forclouser to be completed. so how is this carters and clintons faults? unemployment is from lack of work! where are all the jobs that the wealthy 2% that got the 1.2 trillion in tax breaks were suppose to create? oh yea over seas in china and india and the money is sitting in bank accountsa over in switzerland. the banks aren't looking to stop F.C. hell pay on your loan for 15 years and you've just paid off the interest now lose the house and the bank can still sell it at half price and get more than what they orinaly lent you. this has nothing to do with being a so called loser!

[curse914]

Anyone see the problem of having jobs based in the Housing industry paying for loans on the homes they need to build for a wage. When the construction industry employs the majority in a town, county or state you end up with a circular economy.

An Alternate Energy economy would at least give us bubble that took longer to play out before we completely shift way from the dead end infinite growth based economic model. A Depression is going to be the result of this latest bubble since we have no industry to speak of in this nation.

[bubbadubba]

In January 2008 the mortgage rate for a 15 year fixed loan was 4.8% now with the US in a depression (let's quit kidding ourselves about the "recession" thing) the same loan is still at 4.6%.
Maybe someone can explain that one.

[presjfk]

Actually now the 30 year rate is now 4.875%

[bubbadubba]

If the FED, Bernanke, and the Treasury were not in on the whole thing mortgage rates would be at 3% which would save a lot of people's homes and pump huge amounts of money into the economy was people refinance and lower their payments. at the 3% rate and the FED offering money to banks at 0%, their profits would still be 300%.
When mortgage rates dipped to 4.3% foreclosures went down and home sales started up.
Where is our government on this one?
They don't care about us.

[bubbadubba]

Geez people, foreclosure is the whole plan from the start.
The banks get everything cheap and then resell it later for huge profits.
Same thing happened during the last depression.
How do you think all those ultra rich people in the 40's-50's got so rich?
The banks got all their bad loans wiped out in bailouts and are still getting money at 0%, but mortgage rates keep going up. Banks are now making almost 600% profit on all new mortgages.
Does that sound right to anyone?