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New Data: Housing Crisis Gets Worse; Many Modified Mortgages Still Delinquent!

by Charles Feldman on December 23, 2008 · 5 comments

  

Housing Bailout Programs Flop!

What programs there are–and there aren’t many–to bail out homeowners who are facing foreclosure are turning out to be total flops according to some new data reported by Reuters News Service.

Apparently, “the rate of re-default on modified mortgages is rising and may worsen as the economy deteriorates,” Reuters quotes banking regulators as saying.

The problem seems to be that most of the mortgage modifications till recently were just short term fixes and not geared toward longer term goals.

After 6 months, just about 37 percent of mortgage loans that had been modified or adjusted in some way in the first quarter were delinquent 60 days or more, Reuters quotes both the Office of the Comptroller of the Currency and the Office of Thrift Supervision as saying.

One way to look at this, of course, is to blame it totally on the lenders…one can argue they were playing games with homeowners and not really coming to their rescue. And, in many cases, that is probably true.

On the other hand, what the figures also suggest is that some homeowners have still not learned any lessons from their first brush with foreclosure and agreed to modified mortgages they still could not afford to ever pay!

Of course, for these souls, the government will likely double back and re-modify the already re-modified mortgages to keep them from foreclosure.

Where does this leave the majority of home owners who are paying their bills but are not being rewarded by the government but rather , in effect, punished for their timely payments?

Something wrong with this picture?

You bet there is!!!

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{ 5 comments… read them below or add one }

Rich Mundle December 23, 2008 at 2:52 pm

Pretty hard to pay your mortgage when you don’t have a job.

Rich Mundle – Sherwood Park Real Estate

Reply

charles December 23, 2008 at 10:53 pm

Arn….I totally agree with you. Charles

charles’s last blog post: The BiggerPockets Real Estate Show tackles Madoff & Housing Bailouts

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Steve Hula December 24, 2008 at 10:22 am

We have been in the Real Estate business for 30 years and would like to offer our idea for a solution, or at least an idea, to ease the housing crisis.

Step #1: Give everyone who has a mortgage a 120 day moratorium on their mortgage payments. This would be retroactive for anyone who is currently late on their payment. This would act as a great stimulus to the economy, especially at Christmas time when people are motivated to spend money!

Step #2: Individuals apply for Gov payoff and refinance into a 30 yr. fixed rate of 3% – 4%. Applicant shows decrease or loss of income. Gov will payoff the loan, same as any home owner could do at anytime they were able, and the Gov will hold the deed to these homes so will have something if the home owner still goes into default. If a home owner is still unable afford the payment, work a Gov Subsidized loan with them and keep them in their home, same as the Gov does with Gov subsidized housing projects across the country, only difference is that the Gov will own these homes, not the developers who build Gov subsidized housing projects.

This process could be run through the mortgage lenders, and anyone associated with this process would provide a huge shot in the arm for them and should create additional jobs at the same time.

In short, if the banks don’t want to loan money to help jump start the economy, it’s time for the Gov to step in and do it for them!

Reply

Paulo Pagano December 26, 2008 at 7:14 pm

hi and greetings from Italy, which is in now in a very similar position to the USA regarding current mortgage crisis

Reply

Joshua Dorkin December 26, 2008 at 8:38 pm

I’m sorry to hear that Italy is dealing with a similar mess as we are. In fact, I’d challenge someone to tell me of a country out there that isn’t going through a financial/housing crisis right now.

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