The Foreclosure Crisis is Behind Us? Where? Who says?
This wonâ€™t take long. Itâ€™s not like I want to write about this topic. Itâ€™s just that I feel obligated to say something here, because if youâ€™re reading the mainstream newsâ€¦ or the lack of mainstream newsâ€¦ it could seem that the foreclosure crisis is now behind usâ€¦ AND ITâ€™S NOT.
In fact, I can tell you that itâ€™s not even close.
Maybe the mainstream media has simply gotten tired of the topic. And itâ€™s not like theyâ€™ve ever had a particularly good handle on whatâ€™s going on in real life when it come to foreclosures in general. So, perhaps I shouldnâ€™t be surprised at the latest coverage, or lack thereof.
But I am surprised.
As recently as September of last year, RealtyTrac has been reporting that the crisis is â€śwell behind us.â€ť In its U.S. Foreclosure Market Reportâ„˘ for August 2014, were it reported on 116,913 U.S. properties in August, an increase of 7 percent from the previous month but still down 9 percent from a year ago.
Now, itâ€™s important to realize that RealtyTrac defines â€śforeclosure filingsâ€ť as including, â€śdefault notices, scheduled auctions and bank repossessions.â€ť That means that all of the delinquent loans on which no Notice of Default has been sent outâ€¦ yetâ€¦ arenâ€™t included. And there are always plenty of those. (For the record, I wrote about RealtyTracâ€™s September 2014 report on September 20th last year, and explained in detail what I found to be wrong or misleading.)
Still, RealtyTrac concludes the reportâ€™s numbers as reflecting, â€śthe smallest decrease in the last 47 consecutive months of year-over-year declines in U.S. foreclosure activity.â€ť
And, RealtyTracâ€™s vice president, Daren Blomquist, referring to the September 2014 report was quoted as sayingâ€¦
â€śThe August foreclosure numbers demonstrate that although the foreclosure crisis is well behind us, the messy business of cleaning up the distress lingering from the housing bust continues in many markets. The annual increase in foreclosure auctions â€” the first since the robo-signing controversy rocked the foreclosure industry back in late 2010 â€” indicates mortgage servicers are finally adjusting to the new paradigms for proper foreclosure that have been implemented in many states, whether by legislation or litigation or both.â€ť
Like I said last September, â€śOh, shut-up Daren.â€ť
First of all, there are the Home Equity Lines of Credit (HELOCs), which are interest only loans for ten years, so the HELOCs that were taken out in 2004 and 2005 are all due to become fully amortizing loansâ€¦ meaning that their monthly payments are increasing significantly. That is already causing foreclosures to rise, and it will continue to do so through 2018.
The L.A. Times wrote about this looming threat last August under the headline: â€śHome equity line defaults are likely to rise.â€ť David Dayen, writing for The New Republic late last August, also covered the topic, sayingâ€¦
â€śTransUnion, the credit rating firm, estimates that between $50 and $79 billion in home-equity loans risk default because of the increased payments, which could add hundreds or even thousands of dollars to payments a month.â€ť
For another thing, the HAMP loan modifications that were granted in 2009 and 2010 were almost all modified to a lower interest rate, but only for five yearsâ€¦ so they are also now resetting to higher rates and therefore higher monthly payments. Since most peopleâ€™s incomes have not recovered to pre-crises levels, these higher payments are also a source of increasing delinquencies and therefore potential foreclosures.
There are also a number of second mortgages, among other factors, that are causing increasing numbers of foreclosures. Â Just a couple of weeks ago, on February 11th, Mike Sunnuck, writing for the Phoenix Business Journal reportedâ€¦
- â€śForeclosures hit a 20-month high both in Phoenix and Arizona as a whole in January.
- Foreclosures jumped more than 100 percent in January compared to December both in Phoenix and statewide, according to new numbers today fromÂ RealtyTrac. There were more than 2,300 homes and condos in the foreclosure process last month. That is up 104 percent from December. Statewide that increase is 109 percent from January 2014.
- Foreclosure activity both locally and statewide are at 20-month highs as banks step up their repossessions, auctions and filing of default notices.
- According to RealtyTrac, Phoenix saw a 45 percent increase in January foreclosures compared a year earlierâ€¦ foreclosure auctions in Arizona were up 37 percent in January, also a 20-month high and bank repossessions are up 61 percentâ€¦ those same repossessions are up 58 percent in Phoenix.â€ť
RealtyTrac also reported that foreclosure activity, whatever that means, was also reportedly up “in states such as Ohio, New Jersey, Maryland and California and metropolitan areas such as St. Louis, Los Angeles and San Franciscoâ€¦ and the worst cities for foreclosures include Atlantic City, Las Vegas and eight Florida markets including Tampa, Orlando, Miami and Jacksonville.”
Of course, compared with the carnage that went on during 2009-10, the number of completed foreclosures today is lower, but it’s akin toÂ saying it has declined from the intolerable to merely tragic. Â From three million, or so, down to $1.5 million last year is hardly something about which to brag. Â It’s “down” to almost 30,000 completed foreclosures a week, “down” to over 4,000 a day… in this country… from sea to shining sea.
Does any of that sound like a foreclosure crisis thatâ€™s behind us? Not even close. In fact, it sounds a lot like the same sort of foreclosure crisis Iâ€™ve been writing about since 2008.
Follow the bouncing ballâ€¦
Then thereâ€™s the seemingly-impossible-to-count remaining unresolved delinquent loans that have been bouncing around the still-largely-dysfunctional loan modification process for the last several yearsâ€¦ in fact, quite a few are still bouncing around after five or even six years.
How do I know this to be true?
Because I hear from homeowners all over the country every single day who are still struggling through the process or trying to save their homes from foreclosure as they remain unable to make a payment after falling behind years ago. (In fact, I just helped one homeownerâ€™s loan get modified after seven years of not making a mortgage paymentâ€¦ not that Iâ€™m suggesting that as being a good idea.)
The point isâ€¦ for many, the loan modification process is still much like driving a 40 year-old car with a million miles on it that doesnâ€™t have tires or a steering wheel, and is perpetually running on empty. Some people manage to get to a destination, but most are stuck somewhere along the road waiting for roadside assistanceÂ that never comes.
In judicial states itâ€™s probably worse than non-judicial onesâ€¦ New York and New Jersey come immediately to mindâ€¦ but itâ€™s plenty bad all over. The reality is that I still get as many calls and emails as I ever did, and the problems people are having are the same as they always were.
It shouldnâ€™t come as a surprise to anyone that this is the case. After all, what have we done at the state or federal level over the last few years that would have changed the situation for the better? The answer isâ€¦ nothing.
So, are we thinking that the problems that caused eight million Americans to lose homes to foreclosure are going to fix themselves? Because if thatâ€™s what youâ€™re thinking might happen, then all I can say is please pass the bongâ€¦ and the Oreosâ€¦ because I want some of whatever youâ€™re smoking.
The foreclosure crisis is nowhere near overâ€¦ the economy is still on what could be described as government-funded life supportâ€¦ most kids under 30 are living with their parentsâ€¦ qualifying for a mortgage remains painful and difficultâ€¦ and if youâ€™re not underwater, then youâ€™re close. Maybe not in North Dakota or Iowaâ€¦ Iâ€™m talking about places where people actually live.
And I donâ€™t care about what the media has to say about the subject. I get proof of the ongoing crisis in my email inbox every single day. Iâ€™ll let you know when that changes.
P.S. If you need help getting your loan modified, especially if you’re with Bank of America or Ocwen, but others are okay as well, email me at: firstname.lastname@example.org. Â I want to hear your story and can usually help in some way.