Foreclosures - The Average House Owner And Foreclosures

The Average House Owner And Foreclosures

March 19th, 2008

Seeing the slight rise in retail sales in January some are trying to believe that the real estate crisis related to foreclosures has become to slow down. But one swallow does not herald summer. The housing market continues as before with more houses for sale and more houses going into default and foreclosures. In fact foreclosures are breaking all past records.

The private mortgage houses have confirmed their huge losses. They have now to pay up under PMI policies millions in dollars. There are two big questions. Where is help? How is the average house owner placed in this scenario?

The Bush administration has announced in tandem with six mortgage giants that foreclosures will be put on hold for anyone facing foreclosures currently. The six were Bank of America, Citigroup, Countrywide Financial, J.P Morgan Chase, Washington Mutual and Wells Fargo. They are joining hands with the government in the Hope Now Alliance.

The Treasury Secretary Henry Paulson says that Project Lifeline, an extension of Hope Now Alliance, will put a moratorium on foreclosures for 30 days any defaulting for more than 90 days. This will give time to the borrowers and the lenders to work out a mutually viable agreement. The lenders themselves will be contacting the borrowers who are in delinquency. But if the latter do not respond within 30 days the foreclosure proceedings will commence.

The point at issue is that even after this will the borrowers come forward to contact the lender or will they shy away from the problem as usual like the proverbial ostrich? Most probably those who have invested little to nothing by way of down payment or the like will not be interested in further dialogue. If the house is worth less than the loan there is no point in talking. No operation can enforce borrowers to the negotiating table if they lack any respect for commitments.

However – even after discarding the disinterested there are many who will benefit from Project Lifeline. Foreclosures rose by 80% across the country in 2007. The concentration has been in the large 86 metro areas. The worst affected states continue to be California, Ohio, Florida and Michigan. In Stockton the foreclosure rate rose by 169% from 2006 in 2007. Two thirds of the house up for sale here are coming from the foreclosure category. The Washington D.C. metropolitan area saw a jump of 575%. In greater Baltimore it skyrocketed to 544%, in greater Albany New York by 638% and around Bethesda by 1,288%.