Foreclosures, Delinquencies Continue to Rise

Senate Democrats Offer Measure Limiting Foreclosures
September 30, 2009, Bloomberg

Senate Democrats introduced legislation that would expand federal loan-modification programs to more borrowers and place new restrictions on U.S. lenders before they can foreclose on delinquent homeowners. “This bill will force lenders to modify qualified mortgages, create a homeowners assistance program and give states a bigger role in mediation efforts,” *** Durbin of Illinois, the Senate’s No. 2 Democrat, said in a statement. “It’s long past time for the Senate to step up to keep families in their homes and to help lead the way toward economic recovery.”

Leaving Affordable Mortgage May Become Winning Gambit
October 1, 2009, Bloomberg

Scott Conroy pays the mortgage every month on his one-bedroom condominium in San Diego, even though it’s worth 33 percent less than what he owes and it may take more than a decade to break even. Homeowners like Conroy who can afford their monthly payments are weighing whether to sell and pay the difference, stick it out until housing prices recover, or walk away. In the U.S., 26 percent of borrowers owe more than their home is worth, said Karen Weaver, global head of securitization research for New York-based Deutsche Bank Securities. In parts of California, Florida and Nevada, it’s as high as 75 percent.  So-called strategic defaults, in which homeowners stop paying their mortgages while remaining current on other debts, rose 128 percent to 588,000 last year, according to Experian PLC, a Dublin-based credit-checking company, and Oliver Wyman, a New York-based consulting firm. Two-thirds of those who walked away defaulted on their primary residences.

Banks Bite Bullet on Loans
October 1, 2009, Wall Street Journal

Banks and loan investors are starting to bite the bullet and lower the principal due on home mortgages for some struggling borrowers, a new report from bank regulators shows. That's good news for some homeowners, but may portend more write-offs over the next few years for banks and other lenders now wading through hundreds of thousands of applications for loan modifications. The tradeoff for banks is that by taking the hit now they can boost their chances of being repaid.

Homeowners in Financial Trouble Often Re-default
September 30, 2009, The Associated Press

Lenders are ramping up efforts to avoid home foreclosures, but a report by bank regulators says more than half of borrowers who get help fall behind again. More than 50 percent of homeowners with loans modified in the first half of last year had missed at least two months of payments a year later, the federal Office of the Comptroller of the Currency and the Office of Thrift Supervision said Wednesday.