Home Foreclosures: Why So Many Homeowners are In Limbo When Trying to Refinance or Modify Their Home Loans Now
When home foreclosure specialists can’t get a clear handle on what’s going on with the housing market, it’s no surprise that many homeowners find themselves in “foreclosure limbo” when trying to refinance or modify their home loans.
Even Housing Experts Can’t Say for Sure What the Hell Is Going On with the Housing Market
According to the New York Times article, Mortgage Data Leaves Bankers Uncertain of Trend, bankers can’t say for sure what some recent data put out means. The article states:
Warning that “fundamental [housing] market factors” might be exercising undue influence over the seasonal [mortgage] numbers, the mortgage bankers said they did not know whether the optimistic or pessimistic sequence was more accurate. . . . “We may be at a point where the [housing] market is changing for the better, but we can’t be sure because of the confounding effect of seasonal differences” . . .
Facts NOT in Doubt About the Home Foreclosure Crisis
What’s known for sure is the following — and most of it ain’t good news:
Mortgage Delinquency Up: About 10% more homeowners were delinquent on their mortgages when compared to the same time last year;
Home Prices Falling: The decrease was .3% from February to March. This continues to put more homeowners underwater (or further underwater), which housing experts fear can cause many to simply walk away from their homes (ie, do a voluntary foreclosure);
New Home Applications Fall: The government’s $8,000 homebuyer tax credit expired on April 30th. This could be a contributing factor to the 27% drop in new home applications — with a further drop entirely possible as the economy still struggles to get back on track and credit remains hard to get (for home loans, car loans, small business loans, etc);
More Prime Borrowers are Defaulting on Mortgages: While the home foreclosure crisis started with subprime mortgage borrowers, over the last year and a half or so, more and more homeowners with “good credit” (ie, who had conventional, fixed-rate home loans) are now defaulting on their home loans. The aforementioned article states:
The percentage of new foreclosures in the first quarter [of this year] that were prime fixed-rate loans — traditionally the most conservative kind of mortgage — was 36.7 percent, up from 28.9 percent last year (emphasis added).
Many of these, of course, are due to job losses — and in industries that aren’t coming back — as we discussed in the post, Stopping Foreclosures and President Obama’s Job Summit: What’s the Connection?
Home Foreclosures Now Happening Outside of “Bubble Markets”: A lot of the home foreclosures that happened initially were in what’s known as sand states with bubble markets, eg, Arizona, Florida, California, Nevada.
Now though, foreclosures are being seen in states where the economy is struggling. This makes sense because as alluded to in the point just above about prime borrowers defaulting — if a homeowner doesn’t have a job, they can’t afford to pay the mortgage.
Why So Many Homeowners are In Limbo When Trying to Refinance or Modify Their Home Loans Now
The final thing that’s leading to more foreclosures has been the government’s “prevent foreclosure” program which hasn’t helped nearly as many homeowners as it was intended to. Banks are simply refusing to play ball in some cases, as we discussed in:
Because of “inaction” by a lot of lenders, many homeowners who want to refinance or modify their existinghome loans — who NEED to take some kind of action to stop foreclosure — are feeling like they’re in some type of holding pen with no start time for the race.
They’re in limbo — and many are running out of time and money — which means more home foreclosures may be on the way. It kinda makes one feel:
Oh what a tangled web bankers and lenders weave when they decide to fleece and deceive unsuspecting homeowners.
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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.