The US is going through one of its most challenging phases. Unemployment is at its peak. As people lose jobs, they are faltering on mortgage payments. Hence foreclosures have become common. Not only the jobless but even those who have decent jobs are threatened with home loss.

Take, for instance, the case of Charles and Rose Murssal, residents of Milwaukee County. They were on the right track despite the Recession. The couple had even bought a home four years ago and they had no problems in paying the monthly installment.

However, when the adjustable mortgage went up to $1,650 per month, the couple floundered. They were on the verge of losing their home. Earlier, they had to pay $950 and two years ago, the amount they had to shell out spiked to $1,200. Rose Murssal says that it became very difficult for them to pay the increased amount.

The couple then decided to sit with the lenders and a mediator. After listening patiently to the couple as to why they fell behind on mortgage payments, the couple got a new mortgage amount that was much lower than the previous amount that they had to pay.

Residents of Dane County may have a similar advantage soon. The Dane County Circuit Court has ruled that people be given the option to pay lower mortgage after mediation.

In fact, there are many counties in the US where talks are being held between homeowners and lenders for a lower payment. This arrangement is being made after negotiations between the owner and the mediator over a table. In fact, the trend has become common throughout the US. The latest to join the bandwagon is Wisconsin.

Sen. Lena Taylor of D-Milwaukee has now come up with a foreclosure mediation bill. The bill would help homeowners who are facing foreclosure. It may be mentioned here that Taylor’s district has been particularly badly hit by foreclosures. Of course, people have conflicting opinion about how these programs should be done experts say that mediation is quicker and less expensive than the traditional court hearing. Mediation takes two months instead of a year. It is also less gut wrenching, experts observe.

Connecticut, Ohio and New Jersey have initiated the proceedings. Many states are expected to follow suit. California has also started the process. It may be noted that in California, lenders can take over the property unilaterally. Experts, however, believe that the situation will improve only when the employment scenario improves.

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• Foreclosures and Unemployment Tries Out the Patience of Chicago
• Increase in Foreclosures has Led many Legal Personnel to Opt for Assistance Dealings
• Foreclosures are One of the Prime Reasons for Increasing Homelessness
• Experts are now Reviewing their Apprehensions about a Flood of Foreclosures

Today it is no longer the sub-prime mortgage borrowers who are the victims but the latest wave of foreclosures is attacking the middle-class – those who have lost their jobs. It is a reality knocking on the doors of many as the unemployment situation continues to worsen.

Previously unemployment used to last generally up to a maximum of 6.5 months. It is apprehended that before 2009 draws to a close 3.4 million houses will slide into foreclosure. In 2007 the number was 1.2 million according to RealtyTrac. Rick Sharga its senior vice president said, “We’re not out of the woods yet.”

Speaking about the various stages of the foreclosure storm Sharga said to Newsweek’s Nancy Cook that the first wave crashed because of defective loans. The second one is being driven by unemployment. At the moment the country is seeing the initial phase of the second wave. At this point none of the foreclosures are emanating from sub-prime mortgages.

It may also be noted that the demographics of this crisis is changing and blue collar as well as middling white collar workers are affected. The foreclosures are being placed on those properties that are of higher value than before. The unemployment rate is indicating the severity of the forthcoming foreclosure attack.

The third wave will attack those with ARM loans. In the latter the borrower had the option of deciding which mode of repayment schedule they would follow. Some were interest-only repayments. These loans are poised to go into default because of ridiculous initial rates. It will start making its presence felt from the middle of 2010 and continue till 2011.

The geography of foreclosure is also shifting. Till now the top states were Arizona, California, Florida and Nevada. It will remain so as the over construction had happened mostly in these states. The properties were overpriced and sold with the help of outrageous loans.

Today Michigan and Ohio foreclosures are increasing in numbers – these two states being devastated by unemployment. Ironically although foreclosures are continuing the housing market is showing signs of stability. If the financial entities manage these properties then this trend will continue till 2012 and there will not be any substantial fall in the real market.

But that does not mean construction will pick up. It had contributed largely to the generation of jobs. For a couple of years the housing market will not be healthy – the recession will have a tendency to linger.

From henceforth people will not rush into home ownership.

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• Amidst Foreclosures, People hold Negotiations for Lower Mortgage Payment
• Lenders Seem to be Making more Money from Foreclosures than from Modifications
• Foreclosures and Unemployment Tries Out the Patience of Chicago
• Increase in Foreclosures has Led many Legal Personnel to Opt for Assistance Dealings
• Foreclosures are One of the Prime Reasons for Increasing Homelessness
• Experts are now Reviewing their Apprehensions about a Flood of Foreclosures

It is becoming more and more apparent that lenders make more money from foreclosures than from mortgage loan modifications. Flipping on the television or radio there are innumerable ads of firms offering help in matters related to loan modification.

It is the same when one browses on the Internet. The snag is that it is difficult to know whether these firms will truly be able to be of help. A recent study has shown that the servicers rake in more money when a loan is foreclosed than when it is modified.

The servicers are the firms that collect the mortgage payments each month and send them to the investors. They have found that for them it is more profitable to foreclose even though loan modification might be a better financial option for the borrowers and lenders. This is the revelation of a report conducted by NCLC (National Consumer Law Center) – “Why Servicers Foreclose, When They Should Modify, and Other Puzzles of Servicer Behavior.”

Investors know that net profit is not only about return rate but also about how the expenses related with the investment are held down. Most of the borrowers are under the impression that foreclosures cause losses for lenders and investors. In a short sale the lender might endure a loss of about 10% to 20% of the investment.

But in a foreclosure the lenders will have to agree for 20 cents to 30 cents on the dollar. These calculations might indicate that the lenders and investors would lean more towards loan modifications. But the manner in which the system runs, there are different priorities for lenders, investors and mortgage servicers. They are compensated in different manners.

As per the findings of RealtTrac the third quarter registered the maximum number of foreclosures. Diane E. Thompson a lawyer with NCLC said, “The country is in the midst of a foreclosure crisis of unprecedented proportions. Millions of families have lost their homes, and millions more are expected to lose their homes in the next few years.” Thompson feels that fallen property values and increasing unemployment are pushing borrowers off the ledge. She argued, “With home values plummeting and layoffs common, homeowners are crumbling under the weight of mortgages that were at best only marginally affordable when made.”

Examining foreclosures from 1995 to 2009 it was noted that the servicers make more dollars by forbearance than by slicing off principal or reducing interest.

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• The Middle-Class is now Being Affected by Foreclosures
• Foreclosures and Unemployment Tries Out the Patience of Chicago
• Increase in Foreclosures has Led many Legal Personnel to Opt for Assistance Dealings
• Foreclosures are One of the Prime Reasons for Increasing Homelessness
• Experts are now Reviewing their Apprehensions about a Flood of Foreclosures

Rampant foreclosures coupled with increasing unemployment have tried out the patience of Chicago. The cry is loud and clear – “Bust up the big banks” or “Too big to fail is too big to exist.”

These welcoming slogans are greeting the attendees participating in conferences of American Bankers Association. Generally these meetings are exclusive gatherings with seminars and talks on investment strategies. There are today frustrated young bankers who are hobnobbing with each other and hoping to curry contacts. Lobbying for legislation is usual on the agenda.

Recently as the ABA team conferred in Chicago the bankers were welcomed by thousands asking for their accountability. On Monday 26th October the city residents marched to Goldman Sachs’ offices demanding that the financial giant disburse the huge amount of $23 billion it has set aside for bonuses to the task of preventing foreclosures. On Tuesday thousands planned to send the message to the bankers that “enough is enough”.

Americans are justified in their anger. The crisis started from Wall Street when driven by personal greed the principal bankers divulged in a splurge of speculation that eventually led to the bursting of the bubble. This threatened the entire financial system and the ripples spilled over to engulf the entire world in a depression.

To repair the damage the then President Bush together with Federal Reserve chairperson Ben Bernanke and Hank Paulson (formerly of Goldman Sachs) made the Congress grant $750 billion to be given to the financial entities with the warning that if this was not done the situation would worsen. They reiterated that the money was for the banks to renew lending to the common man and thus allowing the wheels of the economy to run.

In reality behind this cover trillions from the taxpayer’s kitty has been granted to the financial sector without a nod from the Congress. The jumbo banks promptly put the money in their pockets directly. Indirectly the money flowed in as subsidies and guarantees. As a result these banks are surfacing from the crisis bigger, better and swollen with success. They are basking in the acknowledged dictum that they are too big to fail. Without wasting time they have gone back to their tricks of investing in risky speculation in derivatives. Huge amounts have been set aside for their own perks and bonuses.

Thus while Wall Street is swelling and soaring, the rest of the economy is once more floundering and drowning. It is time citizens took up the cudgel.

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• Amidst Foreclosures, People hold Negotiations for Lower Mortgage Payment
• The Middle-Class is now Being Affected by Foreclosures
• Lenders Seem to be Making more Money from Foreclosures than from Modifications
• Increase in Foreclosures has Led many Legal Personnel to Opt for Assistance Dealings
• Foreclosures are One of the Prime Reasons for Increasing Homelessness
• Experts are now Reviewing their Apprehensions about a Flood of Foreclosures

The California Bar Journal has reported last August that there has been an increasing number of accusations against attorneys and legal firms offering help to homeowners in mortgage matters. After investigating 9 of these complaints that were made in 2008 the state bar is now scrutinizing 391 complaints involving 140 lawyers. What is the cause behind so many borrowers making allegations against so many attorneys?

Increase in foreclosures has led many legal personnel to opt for foreclosure assistance dealings. In many states loan mitigation firms are not allowed to take up-front fees from the defaulting borrowers. California is one of these states. But attorneys are permitted to take retainer fees that may run into thousands of dollars prior to doing any work for the borrower. This has made the foreclosure business a money churner and extremely luring for the corrupt.

A question arises about the fate of the legal personnel who had been behind the contracting of thousands of mortgages during the time of the housing boom. The title firms and the investors are not being seen nowadays. Many states are stipulating that the borrowers as well as the sellers are both represented by their lawyers. It seems that with the shutting down of one side of the business they have now entered the second phase by helping borrowers escape from the predatory loans that they themselves have created in the past.

At that time loans were forwarded that did not properly represent the borrowers. It was intentionally done. Sometimes the borrowers did not understand anything but relied on the agents. Lawyers who had been hired to ensure that the borrowers understood the contract did nothing about it but only collected hundreds and thousands at the time of closing. Their contribution towards making educated borrowers was practically nil.

The complaints made against these attorneys are identical to those made against loss mitigation firms. It is alleged that they have provided no services but collected initial fees. No refund has been made despite any work being shown. Positive harm was done by telling the borrowers not to contact the lenders. Sometimes the lawyers tried to directly take money out of the accounts of the borrowers.

It indicates that a good number of attorneys have entered into this business of loan modification with the sole purpose of misappropriating money from the heckled borrowers.

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• Amidst Foreclosures, People hold Negotiations for Lower Mortgage Payment
• The Middle-Class is now Being Affected by Foreclosures
• Lenders Seem to be Making more Money from Foreclosures than from Modifications
• Foreclosures and Unemployment Tries Out the Patience of Chicago
• Foreclosures are One of the Prime Reasons for Increasing Homelessness
• Experts are now Reviewing their Apprehensions about a Flood of Foreclosures

A casual look around will show that foreclosures are one of the prime reasons for increasing homelessness in USA today. The other reasons are loss of jobs, mental ailment, addiction to drugs or alcohol, divorce, violence at home, medical emergencies and natural calamities.

According to New York Times, 10% of all new entrants to homeless shelters across the country have come hounded out by foreclosures. In the Midwest the number is worse – 15%. Each person has a sad tale to tell that will fill up the pages of a novel.

Sheri West of Cleveland had once been the owner of a shelter but now she is running from shelter to shelter herself when her husband deserted her with a pile of credit card debts. The state then stopped financing her stay in the shelter. Without a roof she started roughing it out in her car. The irony is that the once proud West full of self-respect has to ask for help to keep surviving. It is the American style of independence that is now edging her on. It can give the push but it can also drag one down. Obsessed with the icon that is America, the poor are being blamed for everything negative that is happening. It is West and many like her who have made a mess of their lives.

But somewhere there is a silver lining in the sky. There are an increasing number of people like West requiring social services. The general tendency has been to think of them as being indolent and lazy. But now that attitude is changing to empathy. It is our individual choices that land us up on the bed we are in. It is the same with larger societal issues. Like the ants in the famed fable of Aesop, America has been storing up for harsh winter and not being lazy like the grasshopper. But there are other ways of dying apart from starving.

A staggering number of former house owners are now homeless thanks to foreclosure. It means more people are beginning to know the agony of hitting the rock bottom. With so many prostrate the others too are learning a lesson about why this has happened and what can be done to prevent it. The nation as a whole will have to learn to stand up again instead of placing a handkerchief on the nose at the many down there and blaming them at what has overtaken the whole country with rippling effects across the globe.

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• Amidst Foreclosures, People hold Negotiations for Lower Mortgage Payment
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• Lenders Seem to be Making more Money from Foreclosures than from Modifications
• Foreclosures and Unemployment Tries Out the Patience of Chicago
• Increase in Foreclosures has Led many Legal Personnel to Opt for Assistance Dealings
• Experts are now Reviewing their Apprehensions about a Flood of Foreclosures

Since the time of the crash the industry watchers and experts have been giving out warnings about a second flood of foreclosures. But now they are reviewing their predictions.

Jim Summers of Re/MAX Golden Empire said, “Like everyone else, I’ve been waiting, but we’re not seeing the big influx that was expected. At this point, I wouldn’t bank on anything.” His views are echoed by many other pundits who are now saying that it is unclear when the second wave will hit the shores.

It is to nobody’s interest to see thousands of foreclosures entering the real estate market and further push down prices. Both the public and private entities have joined hands firmly to avoid this. This was the view of the director of Casden Real Estate Economics Forecast of Lusk Center for Real Estate (University of Southern California). Conway said, “As long as interest rates stay low, I think banking and government interests will be able to maintain some degree of market stability.”

The federal government definitely does not want another downward pressure on the economy. The banks do not care to see their assets go for a tumble again. The cities are dead against another round of blight – line after line of derelict foreclosed houses left to crumble and decay while inviting criminals and vagabonds.

Looking at the status of the market it is clear that foreclosures never took a rest. But a massive attack seems not to have materialized. It happened in Kern County when foreclosures doubled from last January to August. Foreclosure postings during the first 9 months of this year have decreased by 14% from what it was in 2008. The numbers fell from 6,827 to 5,858 as per the findings of Kern County Assessor. In Kern County the staggering unemployment rate is 14.3%.

This optimism holds despite the knowledge that landmines buried deep below the real estate coverings could explode any moment. The option ARM, the most exotic of the mortgages are about to reset to higher rates. These were freely distributed during the time of the housing boom.

Option ARM initially allowed borrowers low payments but with the passage of time these increase dramatically by two or three times of the original loan. California has been one of the largest recipients of these loans. 2007 was the last year when many of these loans were contracted. As per schedule these should start resetting from 2010 and continue well into 2012.

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• Foreclosures and Unemployment Tries Out the Patience of Chicago
• Increase in Foreclosures has Led many Legal Personnel to Opt for Assistance Dealings
• Foreclosures are One of the Prime Reasons for Increasing Homelessness

It has become a repetitive pattern of foreclosures, unemployment, despair, suicide and murder. There seems to be a depression in the soul of society as very survival is at stake for ordinary Americans.

The killing of a student of Fenger High School in Chicago made the President send Eric Holder, the Attorney General and Arne Duncan the Education Secretary to the scene of crime. Their aim, said Robert Gibbs, the press secretary of White House was to “talk about issues of school violence and youth violence.”

The killing drew international attention at a time when President Obama in Chicago was trying to ensure the hosting of the Olympics in Chicago. This embarrassment caused the President to react strongly.

Undoubtedly the killing of young Derrion Albert was horrendous but it needs to be borne in mind that it is not an isolated incident. In 2008, 400 youth were shot and of these 40 were murdered. Each year more numbers are being innocently butchered due to an increasing cult of violence. In Chicago and some other urban pockets it is a matter of routine. This has resulted in a fear psychosis among children when they start going to school. The first priority of any society is to see that the children are given safe passage to educational institutions.

Troops had to be deployed by the federal government for the fist time to desegregate students in Little Rock, Arkansas. But that was nothing in comparison to what is happening in the streets of America today. Concerted action is required to curb violence guaranteeing safety to the children and their parents to and fro schools.

The present Attorney General, Holder is dedicated to building again the Civil Rights Division of the Department of Justice. But also is required civil rights involvement. In Chicago, Attorney General Lisa Madigan has demonstrated that minorities have been the victims of predatory lending. It is they who were forced to swallow sub-prime loans with absurd terms in the agreement. Mostly the young workers were fleeced and stripped of their American dreams.

The Blacks and Hispanics, cutting across income divides were made to pay much more for mortgages and business and personal loans in comparison to the Whites. They are suffering more from the foreclosure crisis than others – losing homes faster. It is their neighbourhoods that are worst hit – as statistics will testify.

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• The Middle-Class is now Being Affected by Foreclosures
• Lenders Seem to be Making more Money from Foreclosures than from Modifications
• Foreclosures and Unemployment Tries Out the Patience of Chicago
• Increase in Foreclosures has Led many Legal Personnel to Opt for Assistance Dealings
• Foreclosures are One of the Prime Reasons for Increasing Homelessness

The housing crisis continues to be plagued with foreclosures – each 13 seconds a house is being foreclosed upon. This cycle of the crisis is threatening any hope of recovery as property values continue to take a beating worth billions of dollars.

Each day over 6,600 foreclosures are posted as per the findings of Center for Responsible Lending. The latter is a non-partisan body keeping a hawk’s eye on developments. It is based in North Carolina. Already the number of foreclosed houses has touched 2 million this year without showing any signs of slowing down in pace.

It is USA’s worst housing collapse since records have started to be kept in the late 19th century. It seems that things are getting worse with foreclosure now reaching out beyond the sub-prime mortgages to other types. To add to the chaos unemployment has been increasing at a staggering rate.

Michael Barr of the Treasury testifying before the Congress in September said that over 6 million families would be scarred with foreclosure during the forthcoming three years. He said, “The recent crisis in the housing sector has devastated families and communities across the country and is at the center of our financial crisis and economic downturn.”

In September a foreclosure task force set up by the Supreme Court of Florida noted that there was a change in the main cause of foreclosures. It read, “People are no longer defaulting simply because of a change in the payment structure of their loan. They are defaulting because of lost jobs or reduced hours or pay.”

Florida has been and continues to be one of the worst foreclosure hit states. It has the highest foreclosure rate in the nation during the second quarter. 23% of the houses are in some stage of foreclosure. The report noted that “the latest news for Florida is horrifying.”

Some have read an improvement in the situation because of sales picking up and property value increasing in some areas. Perhaps the crisis has reached its nadir but there is no denying that this is the worst fall in prices since 1890. Half of the recent deals have been short sales where the houses have been sold at absurdly low prices. It is ironical that even though the country is getting back on rails from a long depression the housing crisis continues apace.

According to The Center for Responsible Lending the foreclosures are going to erase $502 billion worth of property value in this current year.

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• Lenders Seem to be Making more Money from Foreclosures than from Modifications
• Foreclosures and Unemployment Tries Out the Patience of Chicago
• Increase in Foreclosures has Led many Legal Personnel to Opt for Assistance Dealings
• Foreclosures are One of the Prime Reasons for Increasing Homelessness

In the Senate a proposal has been introduced to put more pressure on the lenders to sit with the borrowers and modify loans so as to rein in increasing number of foreclosures. It was introduced on 30th September by Senator Jack Reed (Rhode Island). He represents one of the worst ten foreclosure-hit states of the country.

The bill proposes the setting up of a new help mortgage help plan to assist the homeowners facing foreclosure. The legislation has been sponsored by three other senators. It is known as Preserving Homes and Communities Act of 2009. It is focusing on the crisis in the housing sector and laying stress on modification of mortgages taking into account the current value of the properties.

Carrots in the form of incentives would be given to the state governments and local administrations to set up these mediation events so as to enable across the table meetings between the borrowers and the representative of the banks. A fund of $6.3 billion would be set up for offering grants to the house owners and subsidizing loans. $80 million would be given as federal matching grants to the state governments and local administrations that have been badly mauled by the foreclosure catastrophe.

It is apprehended by Housing Predictor at over 10 million foreclosures will harangue the country till the end of 2012. The increasing pace of unemployment is making it impossible for the people to keep up with their mortgages. This is resulting in increasing number of foreclosures. Pundits dealing with real estate say that until the housing sector finds a level, sustained economic recovery will not be possible. And the stability in the real estate market cannot come until foreclosures are contained.

Congress has tried to bring about this stabilization by offering the first time nest builders a tax incentive of $8,000. Simultaneously for the last one year the Federal Reserve and the Treasury have worked to deal with the lending group since the financial crisis made a bang nearly one year ago. However these attempts have all met with hurdles and not performed as per expectations. The solutions have been perfunctory and piecemeal. Till date no clear cut measure has been formulated to compel the lenders to be proactive with the borrowers and find out a realistic affordable solution.

Reed said, “Despite federal efforts, the number of foreclosures continues to rise at an alarming rate on pace to surpass last year’s foreclosures by a third. The Preserving Homes and Communities Act will ensure that we are taking similarly aggressive actions to address the housing crisis, which has devastated families, crippled local communities, and dragged down the broader economy.”

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• Amidst Foreclosures, People hold Negotiations for Lower Mortgage Payment
• The Middle-Class is now Being Affected by Foreclosures
• Lenders Seem to be Making more Money from Foreclosures than from Modifications
• Foreclosures and Unemployment Tries Out the Patience of Chicago
• Increase in Foreclosures has Led many Legal Personnel to Opt for Assistance Dealings
• Foreclosures are One of the Prime Reasons for Increasing Homelessness