Foreclosures Increase As Mortgage Modification Programs Lose Steam
Even with the foreclosure moratoriums that a few of the nation’s biggest banks instituted following the robo-signing scandal, foreclosures for this year will likely top one million. According to a report released yesterday by the Office of the Comptroller of the Currency and the Office of Thrift Supervision — two of the federal bank regulators — foreclosure activities were up significantly in the last quarter:
The number of new foreclosures increased to more than 382,000 — 31.2 percent more than in the previous quarter and 3.7 percent more than a year earlier. The number of foreclosures in process increased to 1.2 million — 4.5 percent more than in the previous quarter and 10.1 percent more than a year earlier. The number of completed foreclosures also increased to nearly 187,000 — 14.7 percent more than in the previous quarter and 57.5 percent more than a year earlier.
A large reason for the jump, according to the report, is that mortgage modifications under the Home Affordable Modification Program (HAMP) — the Obama administration’s signature foreclosure prevention effort — have dropped significantly. Mark Zandi, chief economist of Moody’s Analytics, said that a main problem driving the foreclosure machine is the “inadequacy of loan modification programs”.
For months, it’s been apparent that HAMP and the administration’s other programs designed to keep borrowers in their homes are going to fall woefully short of their goals. HAMP has processed only about 500,000 permanent loan modifications, out of 1.4 million trial modifications that have been initiated. The redefault rate (the number of borrowers who again fall behind on their mortgages, post-modification) for the program is an ugly 21 percent.
The Congressional Budget Office estimates that just $12 billion of the $50 billion dedicated to foreclosure prevention will be spent. The Congressional Oversight Panel for TARP, which also oversees HAMP, estimates that at the current rate HAMP will only benefit 700,000 homeowners, far less than the 3-4 million that the Obama administration said would receive aid. “Absent a dramatic and unexpected increase in HAMP enrollment, many billions of dollars set aside for foreclosure mitigation may well be left unused. As a result, an untold number of borrowers may go without help,” the panel said in a report.
There are still plenty of things that can be done to fix HAMP and ensure that the full resources dedicated to foreclosure prevention actually wind up in the hands of homeowners. Here are some recommendations.
""A total of 78,955 U.S. properties received default notices (NOD, LIS) in November, a 21 percent decrease from the previous month and a 31 percent decrease from November 2009 — the 10th straight annual decrease in default notices. November’s default notices total was the lowest since July 2007. ""
DEFAULT NOTICES, administrative 3 months mandatory paper trail, properly 'served' to meet stage one Legal Requirements...
November 2010 lowest since July 2007 thats 3 years and 5 months = 41 months
so finally exhausted the continued monthly supply of about 80,000 defaulting type house buyers, 3.28 million defaulters
SINCE THE TAIL END CHARLIES finally 'evicted' is/has been at 95,000 / month...(why MORE..hum) ANYWAY, FOR SURE ALL 100% OF THE DEFAULTERS SEEM TO BE CONTINUING TO NOT PAY..remaining rent free during the judicial cycle from default to final eviction...
How Long on average ? 12-24 months per house rent-free? pure guess.. another guess is therrefore HOW MUCH 'TAKE HOME ADDITIONAL SPENDING MONEY IS IT @ 24 months and say $1500/month (very modest estimate, low end). and 3.28 million 'beneficiaries' over the 41 months thus far...
Well, a NICE SOLID $36,100 per household ....11.75 x 10 (6+4) => 11.75 tens of billions..=>.$117.50 BILLION boost to the USA economy, spread over 41 months, very very good...
Another pure guess is IF the US IRS will make an Administrative Final Decision regards the tax status of the UNPAIDFORGIVEN DEBTS on those mortgages...
You see, of course, that for every Bank Tax deduction for 'written off mortgage-debt', that same EQUAL amount of "DEBT FORGIVEN MUST BE TAXED", against the 'beneficiary...shall it be 'short term' or 'long term' windfall income?,
and under what special payment terms shall the IRS allow the money-due to be paid...probably the short term mode = 35% average for blue collar workers, spread over 2 years of the estimated $36,100 / household finally evicted, about $12,600 'back taxes due'
and for non-citizens, non-payment could result in deportation/refusals to renew VISAs and all THAT...right?
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