(FinalCall.com) – The Mortgage Bankers Association (MBA) reported November 19, that a record number of loans–1 in 7–is delinquent, up from 1 in 10 a year ago. The numbers also show that 1 in 22 families in the U.S. is in the process of losing their home, up from 1 in 34 a year ago.
Based on those figures, the country’s now on track for 2.9 million foreclosure starts in this year alone.
John Robinson, a management consultant, got a pink slip nearly a year ago and he’s still unemployed. For him it was the beginning of the end of things as his family knew it. With his job gone and his wife still home on maternity leave he tried everything he could to get another job.
“I’m still unemployed so when the foreclosure notice came I wasn’t surprised. It was just another nail in the coffin of our middle class life,” he told The Final Call.
“I sold my car, now we take the bus and the train. We don’t eat out and we don’t shop. The holidays won’t be merry. I’m doing all I know how to keep my house. The American dream for me has become a nightmare.”
The MBA is quick to blame this worsening trend of foreclosures on higher unemployment levels. But that just speaks to the here and the now. It ignores the fact that reckless lending precipitated the economic crisis and prolongs it each day with every new foreclosure, which forces down surrounding property values.
“The damage from reckless lending continues to harm more families and the economy,” said Michael Calhoun, president of the Center for Responsible Lending. “These results underscore the need for a Consumer Financial Protection Agency to avoid another housing debacle and bring focus to the best interests of consumers–who drive 70% of the economy–and of taxpayers, who have to pick up the tab when lenders act irresponsibly.”
Housing counselors want the administration to do more to minimize foreclosures through foreclosure moratoriums, mandatory principal reductions and heightened support for HUD-approved nonprofit organizations that can provide options and long-term solutions for America’s homeowners.
Marcia Griffin, the President of HomeFree-USA told The Final Call, “Too many of our foreclosure prevention programs are not working. It is time for us to look to Main Street and not Wall Street for advice. HUD-approved nonprofit organizations play a critical role on behalf of the homeowners and our relationships with lenders must be strengthened.”
The success of nonprofit organizations like HomeFree-USA in helping to avert foreclosures was documented November 18, in a report by the Urban Institute. It evaluated the effectiveness of the government-funded National Foreclosure Mitigation Counseling program, which is administered by Neighborhood Works America, established in late 2007 to counter growing foreclosure rates.
“The findings announced today demonstrate the real impact foreclosure counseling can have for families facing foreclosure,” said Ken Wade, CEO of NeighborWorks America.
“Thanks to the hard work of nonprofit, HUD-approved housing counseling agencies around the country, and the expertise of their certified counselors, families are less likely to lose their homes to foreclosure and receive substantially better mortgage modifications, significantly reducing the likelihood of falling behind again on their mortgage.”
Since 2007, more than $300 million has been awarded to 1,700 nonprofit housing-counseling agencies like HomeFree-USA to help borrowers in need.
The Urban Institute report found that homeowners who saw a housing counselor and received a loan modification from their lenders had their monthly payments reduced on average $454 more than those who didn’t.
Further according to the report, borrowers already seriously behind on their loans were 60 percent more likely to avoid foreclosure after meeting with a counselor than those who didn’t.
“Homeowners need help but they don’t know there are congressionally-funded nonprofits that can help them, that will advocate for them to get the best deal from their lender, and will hold their hand throughout the modification process,” said Mrs. Griffin.
“Plus we can give them options that many may not consider. We have to get the word out that real assistance is here, and it is free.”
HomeFree-USA has a proven record of helping distressed homeowners. Their services are free, prevents foreclosure in 8 out of 10 of its cases, has an industry-leading success rate and works with homeowners who have either stopped making mortgage payments or are currently making payments that they know are unsustainable (i.e., ARM loans with sharp increases in monthly payments).
HUD-approved nonprofits have served over 750,000 homeowners, however, many groups feel too little has been done to stabilize the foreclosure crisis and too many homeowners are still left hanging.
Failing grade for home loan modification program? (FCN, 08-15-2009)
Home foreclosures continue to rise (FCN, 07-31-2009)