Banks seized more than one million homes last year, a new record – and that figure would have been even higher but for a temporary moratorium by several banks on foreclosures late last year due to improper and shoddy paperwork.
This year the numbers are sure to be even higher still. “About 5 million borrowers are at least two months behind on their mortgages and more will miss payments as they struggle with job losses and loans worth more than their home’s value, industry analysts forecast,” says the Associated Press.
The rate of foreclosures, however, has slowed. Nevada led the nation with one in 11 homes receiving foreclosure notices, a drop of 5 percent from the year before. Arizona too was hit hard with one in 17 households unable to keep up payments, says CNN.
The main cause of the ongoing foreclosure crisis is continuing high unemployment.
The severity of the crisis seems to have outstripped Obama administration efforts to stem it with its Home Affordable Modification Plan. “By April, it became apparent that the program was losing the foreclosure fight; there were reports of 10 new defaults for every HAMP modification and the projections for the number of borrowers who would actually receive a HAMP modification had nose-dived to 1 million from 4 million.”
In addition, upwards of 75 percent of those receiving assistance were expected to default because of other severe debt problems. Approximately 435,000 homeowners received assistance last year.
Nationally, the brunt of crisis is in a small number of states. “More than half of the country’s foreclosure activity came out of five states in 2010: California, Florida, Arizona, Illinois and Michigan. Together, these states recorded almost 1.5 million households receiving a filing, despite year-over-year decreases in California, Florida and Arizona,” says the New York Times.
State attorneys general from across the country have joined together to probe the banks involved in the shoddy paperwork and “robosigning” scandal. “Last week, the AGs announced they will soon settle with the five biggest banks that together have 59 percent of the mortgage-servicing market: Bank of America Corp., Wells Fargo, JPMorgan Chase, Citigroup, and Ally Financial,” says a recent article.
In Massachusetts recently consumers won a significant victory when the state Supreme Court ordered US Bancorp and Wells Fargo to “return two homes seized in foreclosure because they couldn’t prove they owned the homes when they began the legal actions.” says MSN Money.
It is estimated that close to 13 million homes will be foreclosed on before the crisis is over. The Center for Responsible Lending estimates that 17 percent of Latino and 10 percent of African American homeowners will lose their homes.