Foreclosures Increase While Mortgage Help Decrease

July 14th, 2008

It has been noticed in May that while foreclosures increased the pace of mortgage help decreased. Critics have come out harshly about the progress of help engineered by the government.

The Bush administration set up the Hope Now organization to help foreclosure victims. It claimed on Wednesday to have helped nearly 169,000 borrowers in loan workouts in May this year. This is less than 177,000 helped in April. The organization hopes to continue its pace, despite temporary set back to reach its target of 520,000 during the second quarter. This will the highest number of borrowers to be helped since Hope Now took off last year.

Despite all this, foreclosures continue to increase. According to data provided by Hope Now, the sale of foreclosed figures were 82,000 per month as on April and May. In January and March stretch it was 66,000 per month.

The gloomy prediction is that 3 million house owners are likely to lag behind in mortgage payments this year. Half are likely to succumb to foreclosures and lose their houses. This was commented upon by Mark Zandi of Moody’s Economy. He said that Hope Now has been helpful but it is “overwhelmed by the magnitude of the problem.”

In May, across the country 261,255 house owners received foreclosure notices. This is an increase of 48% from May of the previous year and 7% rise from April this year, according to RealtyTrac.

The lawmakers in Washington are dissatisfied with the efforts of the mortgage industry groups. They are going ahead with a programme with a fund of $300 billion that will give governmental backing to new loans for foreclosure victims struggling to keep the roof above their heads. It is expected that Congress will clear the passage of the bill soon.

Those representing the consumers say that the best way of helping the besieged borrowers is to initiate loan modifications by which the interest rates will be reduced. There are other alternatives like allowing some time to the borrowers to catch up on missed payments. Housing advocates across the country are highly critical of the voluntary efforts of the mortgage industry to stem the tide of foreclosures. They are reluctant to make basic changes to the loan contract said Alys Cohen of National Consumer Law Center, Washington. There is a predominant feeling that nothing is being done to make loans more affordable. Strong government intervention is the call of the hour.