The great American bank robbery (in this case, the banks are the ones doing the robbing) continues apparently. Even though some big banks received billions in taxpayer bailout money–largely aimed at stimulating them to, in turn, help bail out homeowners facing foreclosure, new data reveal mortgage modifications actually have declined.
Quoting figures by Alan M. White at the Valparaiso University School of Law, the New York Times says, “Modifications of so-called subprime and Alt-A mortgages–those made to people with tarnished credit–actually fell by 11 percent in May from April.”
What seems to be happening is that some banks are offering new loans, complete with higher interest rates in some cases, rather than offering to modify an existing mortgage.
If there is a bit of good news in the real estate world it may be this: pending home sales rose 6.7 percent in April, according to the National Association of Realtors.
But, here again, the bad mixes with the good—As we’ve mentioned many times previously, most of these home sales are “inexpensive” foreclosure properties…with more of these toxic assets expected to be available in the months to come.
Also, the increase may be artificial: Says the Associated Press: “the increase likely reflects the impact of a new $8,000 tax credit for first-time home buyers that was included in the economic stimulus bill signed by President Obama in February.”
With banks apparently balking at actually helping many of those on the cusp of foreclosure, we are promised to see a sharp increase in the months to come of cheaper and cheaper homes for sale. Bargains for those who have the credit and/or cash to buy them, but disasters for home owners who will likely see the steady decline of their property value continue its downward march.
All the more reason why the Obama administration needs to push and push hard to get legislation passed Congress that will allow judges in bankruptcy court to, if need be, force banks and other lending institutions to modify mortgages to keep home owners in their homes.