Debt Settlement Blog

Serious “bottle necks” are being reported where properties are significantly delinquent, meaning loan payments are over 90 days past due. Potentially, this could make the foreclosure inventory explode, according to the data. About 6.3% of mortgage loans were seriously delinquent during the fourth quarter, compared with 3.62% during the same period a year earlier. The administration aims to help up to 9 million homeowners either refinance mortgages or attain a loan modification that keeps them out of foreclosure. 

The states that took the biggest losses continue to be California, Florida and Nevada, but Louisiana, New York and Georgia have also seen sharp increases in delinquencies, indicating that the recession is spreading, the group said.  On a related note, the House voted for legislation that enables bankruptcy judges to modify and restructure the home loans of distressed borrowers seeking mortgage relief for their owner-occupied property. The See the complete article > Obama Team Announces Loan Modification and Housing Relief Plan

The increase in debt settlement and home loan delinquencies and foreclosure actions in the state came as no surprise to Joe Cox, a community organizer for housing advocate group Maryland ACORN.  “Mortgage service companies and home loan lenders have been avoiding meaningful loan modification at every step of the way,” Cox said yesterday.

Chris Traczyk, a real estate agent with Long & Foster in Elkridge, said most of the listings he has been showing to new home buyers recently have been foreclosed properties.  With several of his clients, “that’s all they’re requesting to see because they’re thinking they’ll get a great deal,” despite knowing the house must be bought in as-is condition, and the bank must approve the price.  But the competition from home foreclosures makes it tough for sellers of other homes, who often have to settle for reducing their sales prices, Traczyk said.

Banks have said they are taking steps such as Citigroup’s plan, announced earlier this week, to lower mortgage payments for some borrowers to an average $500 a month for three months if they lost their job. But ACORN contends banks are just offering short-term solutions, such as tacking a missed loan payment to the end of the mortgage balance, that do little to help borrowers.  Many homeowners come to ACORN fearing they will become late on payments but say their lending company will not consider a mortgage modification unless their payments become delinquent, Cox said. The group says it wants to see mortgage loan modification programs offered more with terms like lowering the mortgage rate or reducing the monthly payments simply by extending the amortization schedule of the mortgage.  “The message people are getting is ‘Don’t try to work this out ahead of time. Wait until you have a problem,’” Cox said.   Sun reporter Jamie Smith Hopkins and the Los Angeles Times contributed to this article