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These days, it may look like the Wall Street trading floor is ground zero for the country’s economic crisis, but the root of the problem is still in your neighborhood.
The State Foreclosure Prevention Working Group, a coalition of officials and mortgage servicers in North Carolina, California, New York and other states, has just put out a grim report on foreclosure prevention efforts.
Despite various state initiatives to deal with the subprime crisis, the mortgage industry’s measures to help people avoid foreclosure, like loan modifications, are failing many communities, the study found:
“Nearly eight out of ten seriously delinquent homeowners are not on track for any loss mitigation outcome”; the number of households getting help actually slipped between January and May.
The long-term picture shows that some borrowers may actually be going backwards as they try to cope with overwhelming debt: “One out of five loan modifications made in the past year is currently delinquent. The high number of previously-modified loans currently delinquent indicates that a significant number of modifications offered to homeowners has not been sustainable…. We are concerned that unrealistic or ‘band-aid’ modifications have only exacerbated and prolonged the current foreclosure crisis.”
The study, which focused on data collected from major loan servicer companies, found that 305,000 loans were in the process of foreclosure in May 2008–a nearly 11 percent jump since last October.
The bleak figures should speak for themselves; it’s unclear who’s listening.
