According to a story in the Los Angeles Times, a larger number of Californians are failing to make their mortgage payments than at any other time in the last couple of decades. However, even less of these Californians are actually losing their homes. The increasing rate of unemployment, in conjunction with the enduring recession, is contributing towards this climbing rate.
Refinancing of loans is another cause of the towering default rate, according to experts. Because plethora of requests are made for lenders to modify loan terms, they had been focusing more on borrowers who have been defaulting on payments rather than on those who are consistent with making their payments on time. However, under current guidelines, a homeowner can’t get refinanced if he has missed a payment. He can, nevertheless, get a modification.
Due to lenders self imposed moratorium on foreclosures, there was a drop in the amount of actual foreclosures in the first quarter of 2009 to 43,620, a 6% decrease from the fourth quarter of 2008. Amendments that have been made to state law also may have played a small role. These amendments made it more burdensome for lenders to foreclose, according to DataQuick. Moreover, lenders found themselves understaffed to handle the increase in paperwork that resulted in backlogs and considerable delays.
The number of foreclosures has fallen nationally as well. According to RealtyTrac of Irvine, there has been a 13% decrease in the number of homes repossessed by banks and a 10% increase in the number of defaults. Fannie Mae and Fannie Mac have ceased foreclosures on loans that they themselves manage. All the while, Citigroup Inc., JPMorgan Chase & Co., Bank of America Corp., Morgan Stanley and Wells Fargo & Co. adhered, as they waited for President Obama to bring his housing plan to fruition.
In spite of this, “many troubled borrowers in California are not eligible for help under Obama’s plan because they owe much more on their loans than their homes are worth. To qualify for one of Obama’s programs, a mortgage’s balance must be no more than 105% of the value of the home”, quotes the Los Angeles Times.
Now that the unemployment rate has hit 11.2% in California and 8.5% nationally, economists surmise an increase in the difficulty people will face in making their mortgage payments, which will unfortunately also lead to more defaults. On the other hand, it is also presumed that foreclosures may not follow the same path, as “banks don’t want to overtax a housing market already flooded with cut-rate properties repossessed by lenders.” Attorney Jeff Isaacs suggests that borrowers hire attorneys to help with loan modifications. Isaacs believes that “There is so much confusion out there, and people end up making really bad decisions, like borrowing against their 401(k) to make their house payments. You do that and you are destined for real misery down the road.”
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The information contained herein is provided for general information and advertising purposes only and is not intended to convey a legal option nor legal advice for any particular case or situation. Nothing in this article shall create an attorney-client relationship. Nothing sent to this law office via e-mail shall constitute an attorney-client relationship. Nothing contained in this article shall be construed to be a guarantee or prediction of result. Prior results are provided for general information purposes only and do not guaranty, warranty or predict a similar outcome with respect to any future matter. Results achieved depend on individual circumstances and not everyone will qualify or be successful in restructuring their mortgage loan.
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