When Will We Get Real About How To Fix The Foreclosure Problem? Another Record Set!!

LAS VEGAS - MARCH 07:  Paul Shipin of Californ...
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I wrote several months back that unless the courts are given the power to alter the terms of a mortgage–the way bankruptcy judges can alter just about everything else–the road to a real estate recovery would be long, bumpy and increasingly painful.

And, here’s the proof.

RealtyTrac reports that home foreclosures have set yet another record for the month of July—-As Reuters reports, this, even though there are reportedly federal and state programs out there that are supposed to bring relief to the home market.

Why do I say “reportedly?” Because, frankly, they really aren’t working all that well. Relatively few people have managed to get mortgage modifications and, when they do, it is almost always a modification of just the interest—which means, in the long run, they may end up actually being even more in debt to the bank.

According to the RealtyTrac figures as reported by Reuters, “Foreclosure activity jumped 7 percent in July from June and 32 percent from a year earlier.”

Not surprisingly, the situation is worse in the very states that enjoyed the real estate bubble the most–Florida, Arizona, Nevada and the nation’s number one basket case right now, California, where things got so bad, they had to pay people with IOUs–though that is now supposed to end September 4th.

Unemployment is still rising…and, even when the numbers slip, it is because more and more of the unemployed have simply stopped looking for work which has the odd result of removing them from the official unemployment rate figures.

It doesn’t take a federal reserve official (maybe it does?) to figure out that as more people are thrown out of work, more people will end up being thrown out of their homes….unless something more radical is done.

And, the funny thing is, the more “radical” thing isn’t so radical at all. In fact, judges already have the power to modify mortgages for second, vacation homes—a nice gift for those rich enough to have two houses. Strange how that somehow becomes a “radical” solution when proposed for those poor folks who only have one roof over their heads?

Obama has long said he favors giving power to judges to bring about the changes needed that might actually make a real dent in the foreclosure epidemic, but then became all but mute when the legislation made its way through the Congress and down to defeat.

About Author

Charles is currently reporting for KNX Radio in Los Angeles, is the co-author of the book No Time To Think, and can be found commenting about the news on his blog, The Feldman Blog, as well as on The Huffington Post.


  1. There are plans in place to get this taken care of, but unfortunately the losing party is so angry that they have lost majority that they are spending all of their efforts trying to get power back, rather than help move the country forward.


  2. The foreclosure crisis will not be fixed until housing prices fall to where incomes can afford them. UNTIL THEN, all that can be done is artificial manipulation of the market which caused the bubble to begin with.

  3. Who is to blame? I feel if the A.R.M. market did not exist, and people did not have these “resets” happening to their budgets in these uncertain employment times, there would be less foreclosures.

    “Liar loans” and other dubious financial underwriting created the foreclosure mess.

    So, a possible solution:

    Appraise the properties at todays’ prices, and give everyone a fair shot at a 30 yr FIXED rate.

    If you can not afford that rate, you are allowed to rent the house at market rent plus be responsible for up keep maintenance.

    If you do that, you will have an option to purchase over the next 10 yrs with a 10% down payment (have some skin in the game).

    Neighborhoods would not deteriorate as quickly with this plan, but property taxes would not be paid to have roads and schools in good shape.

    All you have to to do is look at Cananda, UK, AU, and NZ; their rate of default is low to responsible underwriting (bigger downpayments) and prudent qualifications of borrowing.

    Brian Gibbons
    .-= Brian Gibbons´s last blog ..URGENT NOTICE: Fraud Alert – Phony lawsuits’ didn’t help homeowners =-.

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