Foreclosures Up 81 Percent In 2008
Over 2.3 million homeowners in the United States faced foreclosure procedures in 2008, an increase of 81 percent, according to a report released by Realty-Trac, a southern California based real estate company that tracks foreclosure data.
The study also said that 860,000 homes were repossessed by lenders in 2008, more than twice the number of homes that were seized by banks in 2007.
Congressional leaders are calling on banks to do more to slow the number of foreclosures in an effort to stop the hemorrhaging in the credit markets. They are now openly critical of banks that have accepted funds from the Troubled Asset Relief Program (TARP) without actually making any effort to help homeowners stay in their homes.
Many are pushing for a change in the bankruptcy laws that would allow a judge to modify the terms of a mortgage, a measure that has stiff opposition from the banking organizations and most banks.
Citigroup, in a move that most say was made under government pressure, said that it would support a change in the bankruptcy law that applied only to mortgages that were written prior to the new law’s effective date.
Banking groups point to statistics that show over half of loans that were modified in early 2008, became delinquent again within six months. But a court case in New Hampshire between homeowners who sought modifications and lender Countrywide has left those statistics with little bite.
Attorneys for Countrywide, once the largest private mortgage company, have said in the New Hampshire case that claims that the company is working hard to help modify mortgages of those caught in the sub-prime lending crisis is “mere commercial puffery.” The attorneys call the modification offers, “vague advertisements.”
This may add enough fuel to the fire to get Congress to pass the measure allowing bankruptcy judges to lower interest rates, modify terms and even lower the amount owed on a mortgage in a Chapter 13 bankruptcy proceeding.
Tags: Bankruptcy, bankruptcy attorney, bankruptcy law, Citigroup, Countrywide, Foreclosure, mortgage modification, TARP