Of no surprise to this Jacksonville Bankruptcy Lawyer, The Wall Street Journal reports a record 14% of American households with mortgages were behind on payments or in foreclosure in the third quarter, according to the Mortgage Bankers Association. The new figures, according to The New York Times, “. . . underlined the level of stress on a large segment of the country, a situation that could snuff out the modest recovery in home prices over the last few months and impede any economic rebound.”
In a conference call with reporters, Jay Brinkmann, the MBA’s chief economist, said, “The outlook is that delinquency rates and foreclosure rates will continue to worsen before they improve,” said.
But Brinkman also said, “Clearly the results are being driven by changes in employment.”
Really? How about the mortgage banker’s unwillingness to modify mortgages in a meaningful way (ie. reduce principal balances to fair market value)? As reported in The Washington Post, “the foreclosure problem is building despite a massive government program that pays lenders to lower borrowers’ payments,” and The New Times said, “Unless foreclosure modification efforts begin succeeding on a permanent basis — which many analysts say they think is unlikely — millions more foreclosed homes will come to market.”
As I previously discussed, one cause of this bleak outlook is the Option ARM, which is set to begin destroying California and Florida in January 2010.
What is the middle class to do? Fight the foreclosure and/or strip the second mortgage.
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