Foreclosures Up 5% from Summer to Fall

Federal Effort to Help Borrowers Overwhelmed by Flood of Defaults as More Americans Lose Jobs

(CBS/AP)  The number of households caught up in the foreclosure crisis rose more than 5 percent from summer to fall as a federal effort to assist struggling borrowers was overwhelmed by a flood of defaults among people who lost their jobs.

The foreclosure crisis affected nearly 938,000 properties in the July-September quarter, compared with about 890,000 in the prior three months, according to a report released Thursday by RealtyTrac Inc. That puts foreclosure-related filings on a pace to hit about 3.5 million this year, up from more than 2.3 million last year.

Unemployment is the main reason homeowners are falling into trouble. While the economy is likely out of recession, the unemployment rate - now at a 26-year high of 9.8 percent - isn't expected to peak until the middle of next year.

Unemployment Figures Cloud Recovery Hopes

Mortgage companies sometimes allow unemployed homeowners to defer three to six months of payments while they are looking for a job. But there's little else they can do.

"The sheer scale of the problem is preventing the loan modification programs from having the kind of impact we'd all like" said Rick Sharga, RealtyTrac's senior vice president for marketing.

Last week, the Obama administration hailed a milestone in its mortgage relief effort, reporting that 500,000 homeowners have received help since the program was launched in March. But new defaults are still exceeding the number of borrowers getting help.

The spate of foreclosures stands in stark contrast to Wall Street's recent success. The Dow Jones industrials average eclipsed 10,000 points Wednesday for the first time in more than a year, and employee compensation at financial firms is returning to pre-crisis levels.

But that may simply fuel the feeling of disconnect between Wall Street and Main Street.

"The problem for Main Street people is 'Who cares?'" CBSMoneyWatch editor-at-large Jill Schlesinger said on "The Early Show". "It doesn't feel right. And we get that. The problem is unemployment is a lagging indicator, it will be a longer time before we see that improve."

Mortgage companies have slowed down the pace of foreclosures as they evaluate whether borrowers qualify for the administration's program. Analysts, however, forecast that many of those homeowners won't qualify, and foresee a new wave of foreclosed properties hitting the market next year. That's likely to further depress home prices.

Some homeowners are in such a massive financial hole that it's hard to design a modification that will actually provide lower payments. And some have avoided paying their monthly bills for a long time.

Carlos Estrada, 57, of Tulare, Calif., for example, hasn't made a mortgage payment since February 2008. The construction jobs that kept him working more than 40 hours a week during the housing boom have all but vanished.

Earlier this year, he turned down a modification offer from Bank of America because it would have incorporated his unpaid balance and raised his monthly bill. But a bank spokeswoman said Wednesday that Estrada's foreclosure sale had been postponed until late next month while the bank reviews whether he can qualify for help.

"I'm still here waiting for them to help me resolve this situation," Estrada said in Spanish.

According to the RealtyTrac report, there were nearly 344,000 foreclosure-related filings last month, down 4 percent from a month earlier but still the third-highest month since the report started in early 2005.

It was the seventh-straight month in which more than 300,000 households receiving a foreclosure filing, which includes default notices and several other legal notices that homeowners receive before they finally lose their homes.

Banks repossessed nearly 88,000 homes in September, up from about 76,000 a month earlier.

On a state-by-state basis, Nevada had the nation's highest foreclosure rate in the July-September quarter. Arizona was No. 2, followed by California, Florida and Idaho. Rounding out the top 10 were Utah, Georgia, Michigan, Colorado and Illinois.

[Basilovecchio]

Please read and decide if I am one of the biggest fools in the world
or if by chance I got it right and all can benefit.It is lenghty but not copy written so you can edit ,change,or challenge.
If you feel that this has merit,please edit and post,post,post!
If you feel I am that bigger fool let me know as well ,email bestsolutionsfl at aol dot com
The "EVERYBODY WINS PLAN"
A business plan that ENDS FORECLOSURES,short sales and all defaulting loans.Please PPIP participants (5) pay attention,you can convert that $3 billion collected and in your funds (Blackrock NYSE BLK $226 and 4 others )
into 20% to 30% PER YEAR as a ROI in the next 7 years.
The federal goverment is helping these companies to buy
NON-PERFORMING MORTGAGES,that is loans that are in this mess and there are more then 8 million of them,at possibly lower than 40%
of their face value.This is what the ABX market value is at or around if not lower.
I am a Real Estate Broker so please check my numbers and information,my accuracy is I hope faulty on the conserative side.
The concept must be judged as valid and workable.
Here we go.
$100,000,000,000 worth of loans are purchased by PPIP
for $40,000,000 with an out of pocket cost of $13.34 Billion.
The feds are giving and lending two-thirds of the amount!!!
How's that for a start up STIMULUS?

PPIP Funds now own the loans.
The "Everybody Wins Plan" now modifies each loan so it is IMMEDIATELY being paid and current.In such a manner that
they would be consider "credare"-trust worthy.
85% of these loans go to the original homeowner because they wish to remain in their home and will do so BECAUSE THE NEW LOAN WILL BE AFFORDABLE AND MANTAINABLE. The remaining 15% will have multiple
candidates begging for the home ownership.
THE MAGIC FORMULA:
A low rate of interest with a longer payment time.
A new type of mortgage that makes the home affordable and maintainable.
A FIXED 7 year payment (84 monthly payments)
with a balloon payment cosisting of a 30 year fixed rate mortgage for the balance.
NO GREAT SCIENTIFIC MIRACLE HERE!Just a simple new mortgage
that makes the homes affordable,by taking away the investment,
if there is really any such thing,the so-called investment in the home
and instead making the the SHELTER USEAGE as the motivating factor.
HOW THE NEW MORTGAGE WOULD WORK.Example:

1.The home MUST be evaluated.Fair Market Value (FMV) MUST
be established.
2.New loan is set at 120% of FMV (This is not a typo...yes 120%
of FMV)Hey folks "Buy PPIP Funds they are going to make
more than John Paulson and have no risk thanks to fed STIMULUS money.
3.Part One of new loan is 7 year portion that is 84 fixed payments of

PRINCIPLE AND INTEREST.
Principle payment per $100,000 loan is $100 per month .
Interest is based on 5 year Treasury note and 10 Year Treasury note
e.g.,the mean of the two....5yr@ 2.25 with 10 year at 3.25
would be 5.5 divided by 2 equals 2.75% INTEREST.
Interest payment would be $275 per month
THE TOTAL MONTHLY PAYMENT FOR 7 YEARS WOULD BE A
VERY AFFORDABLE......$375 per month per $100,000 loan
A $200,000 home loan would be $750 per month ,84 payments.
All that is needed is a FMV with a HUD and two payments at closing
and 8 million Americans will once again "believe".
Payment number 85,the second part of the loan IS PAYMENT IN FULL with the use os a new 30 year fixed mortgage for the balance owed.
The $100,000 loan would have a balance of $91,600.
This was at the start on a loan of 120% of FMV but 7 years in the future based on fed estimate..homes on a 10 year average increase
4.25% per year..(if you believe that;this new mortgage would be @90% loan to value.
BUT there is really three and always three possibilities of
any and all future prices.Price will be higher,lower or the same.
Two out of three make a great senerio for EVERYBODY.If prices are (unbelievably) LOWER,no problem REPEAT the 7 year 30 program,"EVERYBODY WINS"
Let them stay in their homes,
Let them be able to afford it,
and be able to manage it.
THIS IS THE REAL AMERICAN DREAM.
Turn this challenge into a greater good for all.Re-establishing "CREDARE" .Faith in the American people and home values.
This is a fast and great solution to the problem and it allows for time
to fix the blame and to do what is necessary for future prevention.
We simply must get off the idea that we should only help "the good" people and leave the "reckless" ones to their own ends. Whether the foreclosed house next to me was owned by a good guy or a reckless flipper doesn't matter.. my home value goes down either way due to the foreclosure.
We simply have to set aside moral judgments and fix the problem.Why not at the same time create revenue for all taxpayers.

Basilovecchio

[democracy1]

Close to a million new foreclosures. Great! More properties to attract crime. Less tax revenue. More blighted neighborhoods. Disgusting!

[sjc_1]

Some of the foreclosures were people buying low and selling high in the house flipping bubble. Some of those "investors" leased to tenants, they collected rent but did not pay their mortgage. The people that suffered were the renters and the banks would not honor the lease and threw them out, even though they always paid their rent on time. Then the house sits empty while bottom feeding vultures circle to make money on the downside that they caused by inflating the bubble in the first place....what a country.

[nextgenman09]

But hey, "economist" peddle "the recession is over!" everywhere they go. The self-absorbed morons who didn't even see the biggest crash since the Great Depression coming....