subject: Foreclosures high in Southwest and North Counties [print this page] Foreclosures high in Southwest and North Counties
The US economy is on a tailspin. Unemployment is at its peak. As people lose jobs, even those with excellent credit scores are faltering on mortgage payments. Hence, foreclosures are high.
The Federal Government had come up with a program Making Homes Affordable to help the harassed homeowners. As part of this program, loans of homeowners are being modified, first on a temporary basis of three months, and then permanently. The program started off on a slow pitch. Now it has picked up pace. The government-controlled banks are asking lenders to tighten the leash on errant homeowners. Economists observe this hard-line approach is very much visible.
In fact, Freddie Mac and Fannie Mae have tried hard to rein in foreclosures. Foreclosures touched a very high level in '07 and '08, after which both the lenders placed a moratorium on foreclosures. That of course, did not help. In Southwest and North Counties foreclosures just went up. This was revealed by ForeclosureRadar.
The U.S. Department of the Treasury launched programs that gave incentives to lenders who modified the loans of delinquent borrowers, particularly those people who owed much more than what their homes are worth. In fact, underwater homes are plaguing the economy. In San Bernardino and Riverside counties, the problem has reached gigantic proportions. People are walking out of the homes, rather than pay mortgage.
In North and Southwest Riverside counties, home prices have gone up. Foreclosures also plummeted because of the government incentives. However, there is distress, because the number of homeowners who have fallen behind on mortgage have shown a sharp increase. In June, the figure is 15.9 percent in Riverside County while in San Diego, it is 8.6 per cent.
The director of Housing Works, Ali Tarzi, said lenders would warn borrowers the moment the default period exceeds two months, instead of the normal 90-day period. However, a cause for concern is that lenders are rejecting applications for loan modifications more frequently than ever before. The reasons that are given are very flimsy. Lenders are also sending more default notices than before. In Southwest Riverside, it has gone up by 6.5 per cent.
Experts, however, observe that unless the government creates more jobs, the problem will not wane. As of now, people do not have the requisite funds to pay their mortgage. Even those who do have jobs, they have suffered pay cuts. Hence, the situation is indeed very pathetic.
