Foreclosures mount as borrowers walk away

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Mortgage foreclosures rose to an all-time high at the end of 2007 as borrowers with adjustable-rate loans walked away from properties before their payments increased, the Mortgage Bankers Association said today.

New foreclosures jumped to 0.83 percent of all home loans in the fourth quarter from 0.54 percent a year earlier. Late payments rose to a 23-year high.

About 40 percent of all foreclosures come from prime or subprime borrowers who couldn’t make their payments before the reset.

3 Responses to Foreclosures mount as borrowers walk away

  1. It’s shame people are walking away from their homes. In many cases, they can either refinance with a new loan or negotiate to keep their existing rate close to what it was, pre-rate change. If they would only talk to their lender. Many of these borrowers look at the mortgage market problems and think “well, we’ll just buy another home in 2 years after prices drop.” NO THEY WON’T. The subprime market will hopefully never be like what it was from 2002-2006. It will take a whole new generation of village idiots to think they can make loans like what were being offered during that time frame. Fannie and Freddie will change from their current 2 years since prior foreclosure to qualify for a new loan-the limitations could wind up being 5-7 years unless the borrower puts 20% down. Just because someone is upside down on their home does not mean they should walk-people don’t necessarily walk if their car is upside down (although that does happen too). People walking from their homes might be in the position that they may never own another home-or at least not for close to a decade. I’m in the lending business, and we were working with borrowers yesterday who were in foreclosure with their first mortgage. One spouse has irregular income from a primarily commission job that could take 1-2 years to get established. If they went out and found a job with regular wages, they could work out a forebearance plan. But the lender won’t work with them-because right now, there is still no way they can make the payments. People should consider second jobs, get rid of the high-speed Internet, cell phones, 400 channel cable plans, $150 trips to the salon, etc., to keep their homes. While many borrowers have reduced their expenses, we see examples of this kind of spending all of the time.

    Anonymous
    March 6, 2008 at 4:11 pm

  2. If I read this corectly, there are 99.17% of Mortgages NOT in trouble. I hate to see people mess up there credit, lose their homes but they probably were not too smart to begin with and the greedy lender hooked them for commissions. These are the folks that, probably, used their homes as an ATM too. I have no sympathy for these folks or their lenders – sorry to say.

    The Feds should keep their nose out fo this mess and start raising interest rates right away to combat inflation.

    Let the free market work the mortgage mess out on its own. After all, it was the free market that created it.

    The Feds should look into banking and security irregularities (fraud) though, and when found – prosecute and throw the bastards in jail.

    I understand this goes against the grain of what everone else is feeling on this subject, that feds should continue to lower rates to bail out the bankers and try to help the distress home owners (again, bank bail out). All the while – prices keep escalating, people loosing jobs and the price of the war equal inflation. I’m not sure which is better, reccession or inflation – but I am a believer in the free market.

    Anonymous
    March 7, 2008 at 9:39 am

  3. As a Real Estate Professional in Colorado Springs I do find that many people just lack the understanding of “WHAT TO DO”. When I talk to people they think their only option is to have the bank foreclose. The banks do a great job of scaring people into paying or running. They have done very little in the way of education. The best option for many people is to just call like others have said.

    If you really cannot afford the loan and need a way out call a professional. I negotiate short sales with all the banks. If you know of anyone in this type of situation please call me to help them.

    Jay Carden
    RE/MAX Properties, Inc.
    http://jaycarden.com
    jay@jaycarden.com

    Colorado Real Estate Broker
    March 7, 2008 at 4:30 pm