More Mortgage Woes Ahead

When the Obama administration established programs in March to help home owners modify mortgage payments or refinance for a lower interest rate, the intent was to curb the foreclosure crisis and keep families in their homes.

Now, seven months later, rates are ticking up, programs are expiring and foreclosure numbers are still on the increase.

Mortgage rates have risen to 5.07%, up from 5.02% only two weeks ago.  The previous three weeks carried rates as low as 5%.  As the first time home buyer assistance program comes to an end in November, more and more lenders are taking notice of the drop in new loan applications.

According to the Mortgage Bankers Association weekly report, refinance applications are down 17% from last week and new mortgage applications dropped almost 14%.

The foreclosure numbers tell the real story  Not only foreclosures currently in process but also foreclosures that are pending.  Current foreclosure numbers have increased  in the third quarter to 937,840, up 5% from the previous quarter, a 23% increase over last years third quarter numbers.

Banks have delayed the repossession process while they evaluated whether borrowers qualified for the Federal Programs offered to them.  Once it was determined that the borrowers did not qualify, the bank took back the property.

James Saccacio, Chief Executive Officer at RealtyTrac, says,

“REO activity increased from the previous quarter in all but two states and the District of Columbia, indicating that lenders may be starting to work through some of the pent-up foreclosure inventory caused by legislative delays, loan modification efforts and high volumes of distressed properties”.

This problem is not likely to improve.  An inventory of 7 million properties are in the foreclosure process or likely to be seized, up from 1.27 million in 2005, according to Amherst Securities Group LP.

Rising unemployment rates,  decreasing home values added with the high inventory of homes due to be announced by mortgage lenders across America is shaping up to be a mortgage adventure that few want to be a part of.

Related posts:

1. Mortgage Rates Rise as Foreclosures Increase
2. Fed Says Growth Likely To Return
3. California Housing Woes To Continue
4. More Changes Ahead for Freddie Mac and Fannie Mae
5. Democrats Say Lenders Are Falling Short

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