Foreclosures On The Rise – Loan Modifications Down
The US mortgage industry took another battering in July. Mortgage foreclosures surged up another 9% compared to the month of June. Latest figures show that this trend will continue on unabated into the next year.
Since December 2007 more than 2.3 million homes have gone the foreclosure route. Millions of recipients of mortgage loans have simply been unable to meet lender repayment demands. Industry experts directly attribute a vast majority of these mortgage failures to the economic recession.
From figures released by Realty Trac, some 900,000 homes were taken over by lenders in 2009. This year will see that figure grow to a million homes and as these trends continue, by 2011 foreclosures will possibly reach the 1.5 million mark.
The government has so far invested 75 Billion in the Home Affordable Modification Program. These government sponsored loan modifications were introduced 18 months ago, in an effort to assist struggling homeowners with reduced mortgage payments.
Financial analysts, while not yet declaring the program a failure are watching it as it steadily loses ground. At least half the people who originally signed up for the program have dropped out. Only 17,000 new trial modifications began in July, the lowest amount since its inception.
The Treasury Department has since given warning that cancellations were expected to exceed new applications for modifications for the following months. The mortgage repayment which traditionally was a normal household’s major debt is now seeing some major competition.
The economic recession has led to borrowers having unusually higher levels of miscellaneous general debt. This type of debt is typical of the repercussions from a crippled economy. The longer the economic recession lasts the greater the accumulation of household debt grows. This growth of debt will see more mortgages fall into default as a direct consequence.
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