Bank and Government Foreclosures Increasing Rapidly

by Peter Vernon on Foreclosure Crisis

Data from RealtyTrac showed that bank and government foreclosures notices were received by over 2 million distressed homeowners in 2008. In January 2009, bank and government foreclosures reached 72,694 while pre-foreclosure filings were reported to be about 166,860.

An alarming increased in bank and government foreclosures was reported in February 2009 which saw a 6 percent rise from the previous month and 30 percent higher from February 2008.

According to RealtyTrac, some of bank and government foreclosures notices were received by distressed homeowners of unsold condominiums and subdivision houses. But majority of bank and government foreclosures filings were made on young families, first-time homebuyers and middle-aged couples.

The increase in bank and government foreclosures are blamed on unscrupulous lenders who wanted to profit quickly during the housing boom, to mortgage brokers who offered adjustable-rate mortgages and to banks that were willing to lend then but are now refusing to face delinquent borrowers.

Distressed homeowners reacted to bank and government foreclosures notices that they received by avoiding their lenders out of fear, challenging the system or making sense of policies that encourage homeowners to default on their loans to get ahead.

Experts noted the bureaucratic confusion concerning the problem of foreclosure in the country. They said that government programs aimed at preventing the spread of foreclosures sounded inspiring. However, they pointed out that these programs were created by lawmakers who do not work in loan modification departments of mortgage servicers and lenders.

They added that people who worked at mortgage servicers and lenders do not understand policies of older programs and the current foreclosure prevention program from President Barack Obama.
Furthermore, experts contended that it is cheaper and easier to turn over troubled mortgages to foreclosure lawyers. The banks then can charge off the mortgage loans, in the process saving time of their employees.

Meanwhile, experts blamed lenders on the increasing foreclosures rate in the country. They explained that many mortgage loans have private mortgage insurance that protects lenders. That is why lenders are not worried to take losses at foreclosure homes sales, according to experts.

On the other hand, experts noted that the increasing number of families facing foreclosure is affecting taxpayers who bear the brunt of the housing market crisis.

And while bank and government foreclosures continue to find their victims, abandon and vacant houses are dragging neighborhoods towards deterioration.

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