Will The Mortgage Foreclosure News Ever Get Better? Maybe. But Not Yet!


No way to sugar coat this. The news on foreclosures is not good.

A new government survey reveals that both foreclosures and delinquencies went up in the third quarter, despite government attempts to get banks and other lending institutions to modify loans for those in financial distress.

The problems are many: For one thing, many people who are delinquent and try to get a loan modification get turned down; strange as it might seem, some banks actually prefer you to be in foreclosure before they will extend a helping hand.

And, even when they do try and “help” – it is almost always in the form of interest rate reductions rather than reducing the actual principal.

According to the government survey, as reported by the Christian Science Monitor, even loans backed by the federal government are in deep trouble with “only 83 percent of loans guaranteed by the Federal Housing Administration or Veterans Benefits Administration” listed as performing.” That is down two percentage points in the second quarter.

Bottom line, we are far from being out of the woods economically, even if the unemployment rate recently dipped ever so slightly.

People are still losing jobs monthly (though not as many) while others still can’t find new ones to replace those already lost.

So long as that continues, we are likely to not see any meaningful reversal of fortune for those facing foreclosure in the weeks and months ahead.

Wish the news were better. But it ain’t!

Photo: Henrique Vicente

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. Good post.

    The foreclosure problem will be with us for some time, and it will drag out once the bank’s shadow inventory starts hitting the market in the coming months. Hopefully that doesn’t delay any general recovery too long.

    As far as loan mods go, I read research from NAR and RealtyTrac that points to a statistic that less than 3 percent of all loans that qualify for loan modification actually get approved for loan modification. Even taking into account not everyone who qualifies will apply, that statistic is ugly.

    I suspect one of the reasons is the new NPV test that lenders and investors do to determine whether they will modify or foreclose. It really begs the question, “Who are the loan mods setup to benefit?” The link to the new NPV test guidelines are found here: http://www.treas.gov/press/releases/reports/modification_program_guidelines.pdf
    Scroll down to the part about valuation and net present value test.

    I might write an article about this later in the week.
    .-= Craig Grella´s last blog ..Welcome to Cornerstone =-.

  2. I think it is hard when banks only help you after the problem, the amount of houses standing empty only puts more pressure on other resources such as the police to protect those areas from vandalism, the reduction in price due to an empty sitting property. I think a much better way to solve the problem would be to help people in this situation before it goes to far and help them with a payment plan/ solution that they could work with.

  3. Justin Bartlett on

    Already we’re witnessing some indicators of recovery; it doesn’t help that ~300,000 homeowners will face foreclosure this month, but eventually the market will turn around ***fingers crossed****

  4. Foreclosure is the critical problem anyone would suffer from and will never like to happen. It is really hard to recover from one. Hope the conditions turn positive and the foreclosure news will someday get better. Thanks for sharing nice information. Keep posting.

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