Seriously Delinquent Mortgages NOT Facing Foreclosure More Than Doubles

25 Jun Seriously Delinquent Mortgages NOT Facing Foreclosure More Than Doubles

Mortgages in default are taking longer to go to foreclosure. In yesterday’s Washington Post it was reported that “During the first quarter of this year, the share of all homeowners seriously delinquent on their mortgage but not yet facing foreclosure more than doubled to 3.04 percent, or about $227 billion in loans.” In 2008 there were “only” $97 billion in seriously delinquent mortgage loans that were not in foreclosure.The 3.04 percent figure compares to less than 1 percent in the first quarter of 2007.

Someof the backlog is due toa slowdown in the pace of foreclosures.Fannie Mae and Freddie Mac put a temporary moratorium on foreclosures late last year as didsome otherlenders.

Housing prices are in a free fallacross the country. The Post article revealed that existing-home prices fell another 16.8 percent in May compared with a year ago. Since so many more distressed mortgages are in limbo, it is expected “thatforeclosure rates are likely to increase dramatically during the second half of this year and into 2010 as lenders work through the backlog.” Thelikely result will bean even further drop in home prices.

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Peter Orville is a bankruptcy lawyer in Binghamton, located in the Southern Tier of New York. He is a member and New York co-chair of the National Association of Consumer Bankruptcy Attorneys.
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