Home Foreclosures Continuing with its Galloping Pace as Banks Fail to Process Applications

foreclosed

Home foreclosures are continuing with its fast galloping pace as banks fail to process prevention applications. The Obama government launched its $75 billion programme with much hope but since its launch the measure has been riddled with hurdles causing delay. Many borrowers on the brink of falling into foreclosure have repeatedly complained that while time is vital for them, phone calls are not answered. Lenders are giving wrong information. Many complain that they are being refused on vague incomprehensive grounds.

In the first part of March 2009 the plans were disclosed. The target was to prevent foreclosures of about 4 million borrowers by modifying their loans into more affordable terms. So far 190,000 applications for modifications have come through according to USA Treasury. During this time lenders have initiated foreclosure proceedings against over 1 million residential houses as per the findings of RealtyTrac. Nearly 20% have been successfully foreclosed or repossessed. According to the Center for Responsible Lending 2.4 million Americans are potentially at risk for falling prey to foreclosures. Another 8.1 million will be ensnared into it within the forthcoming four years.

The general complaint by the borrowers is that the banks are taking nearly 45 to 60 days time before responding to enquiries. This is according to the findings of NeighborWorks America. It is a non-profit counseling body dealing with prevention of foreclosures.

There are some borrowers who are waiting for a reply even after five months have lapsed since they contacted their lenders. This has led them to continually live in a state of uncertain fear.

Joel Naroff of Naroff Economic Advisors said, “Some lenders may not be turning (homeowners) down right away because it might be politically easier to push them off and delay. No one will admit they’re doing this.”

According to Naroff the banks are being flooded with demand for even more mortgages that includes refinancing. As more people are becoming jobless more applications are piling up. Mortgage defaults and unemployment numbers are going up hand in hand. This means that there is the fear that even those who have managed to modify their loans might falter in making monthly payments. Things will become worse with the falling of property values.

The lenders contend they are doing their best to tackle this flood of applications. But some officials say that the banks are intentionally delaying their responses. Richard A. Smith of Realogy said, “The loan-modification program is suffering. What we’re doing right now isn’t working as expected. The delays are horrible. Banks, unfortunately, just weren’t geared up for this.”