Borrowers Awaiting with Trepidation the Knock of Foreclosure that is not Coming

Posted on July 2, 2009
Filed Under Foreclosure Homes | 1 Comment

Borrowers are falling into a state of financial limbo. They have defaulted and are waiting with trepidation the knock of foreclosed homes– but that is not coming; it is threatening to come. This state of uncertainty can be traumatic.

The pile up of delinquent mortgages is at present affecting 1 million. It is a dark cloud hanging over hopes about recovery in the housing market masking the real depth of the foreclosure crisis. It is potentially threatening to push down prices further just at a point of time when some pockets in the country are showing signs of recovery. For lenders the situation is even more dangerous than before.

Patrick Newport of HIS Global Insight opined that this mean foreclosure rates would continue to increase.

The recession has primarily been caused by mortgage woes and many pundits think that recovery cannot start unless the housing market makes a turn around and the price of houses reach a level of stability.

It seems that if foreclosures are delayed the borrower should feel relived. But in reality it just prolongs the financial pain leaving the borrowers in a state of limbo with the sword of Damocles hanging over them. The problem is that even after moving out they fail to move on with life.

One of the victims is Charlotte Jenson. She literally begged Bank of America to proceed with foreclosure for her house on Glen Allen in Virginia. Finally she filed for bankruptcy and moved out. A year later the house stands as it is with no move being taken by the bank.

The first three months of this year saw the number of delinquent houses double to touch 3.04%. It calculated to $227 billion worth of loans. In 2008 during the same first quarter the loan amount in delinquency was $97 billion as per the findings of Inside Mortgage Finance.

This situation reflects the failure of the lenders to handle the swelling number of delinquencies. Housing industry consultant Howard Glaser said, “Lenders are having an immensely difficult time handling the capacity. They are torn between loan modification, short sales, foreclosures, and they are finding they can’t do all these things at once, and do them well, so we’re seeing a lot of things falling through the cracks.”

The backlog also shows the artificial halt in foreclosures because of the various moratoriums imposed by the government and the lenders.

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