Homes in Foreclosure Break All Time Record

The continued job losses being experienced across the nation are driving up delinquencies to all time record highs.  The number of loans in foreclosure at the end of the 3^rd quarter measured a record 14.41% , which are at least one payment past due or in some stage of foreclosure.

This is attributed to increasing job losses according to Jay Brinkmann, Chief Economist of the Mortgage Bankers Association (MBA).   Brinkmann reinforced this by saying “Mortgages are paid with paychecks, not percentage point increases in GDP”.  I am sure this statement will not endear him to President Obama and Tim Geithner.  Most probably, both immediately took him off their Christmas lists.

Considering the employment picture is unlikely to improve anytime soon, it is highly likely the foreclosure numbers will continue their upward march.  For those folks expecting some additional help from the various government programs, they are likely to continue to be disappointed with these programs.  This is because according to the US Treasury Department, referencing the most recent numbers available; as of September 25^th 2009, there have been just 1,080 borrowers in all of America, who had completed the trial loan modification period and received the government’s Home Affordable Mortgage Program (HAMP) loan modification.  This atrocity will be discussed in full in my next article.

With a new record of about 4 million loans now at 90 days or more past due, the resolution of these seriously past due loans will put an additional burden in areas of the country already hard hit with foreclosures.  Once a homeowner gets 90 days past due, the most likely outcome is a bank foreclosure, as the banks will then no longer accept a partial payment and are continuing to deny the vast majority of loan modification requests.

With one of the primary criteria in obtaining a loan modification, a stable job and income on the part of the homeowner, anybody losing their job and unable to supply verification of an income, will receive a loan modification denial letter.  With the jobless numbers continuing to increase, the loan modification denials will also continue to increase.  This is actually a benefit to the banks as it has been shown in numerous cases they routinely look for ways in which to turn down modification requests.

Homeowners in the States of; Arizona, California, Florida and Nevada are the hardest hit.  The latest numbers from the MBA reveal 43% of all foreclosures started in the 3^rd quarter, originated in one of these four States.  These happen to be States which had substantial increases in home prices during the 2000-2006 time period and some of the largest declines in price since 2007.  The large decline in home values combined with staggering job losses has combined to devastate entire regions within each State.  There is unlikely to be any quick fix or return to normalcy for the millions of homeowners affected.