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