The foreclosure tsunami has struck

It's sometimes amusing to see how hard the media tries to spin bad news into good news. For instance, this article from ABC today.

(Reuters) - U.S. mortgage foreclosure filings dropped for a second straight month in February, and notched the smallest annual increase in four years as housing-rescue efforts contained activity, a report released on Thursday showed.

It sounds like good news, huh? There's just one problem: the foreclosures report that was released today concerned the whole first quarter, including March numbers.
Since when did the news media start preferring outdated data over recent data?
I guess when the recent data said things like this.

RealtyTrac® ... today released its U.S. Foreclosure Market Report™ for Q1 2010, which shows that foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 932,234 properties in the first quarter, a 7 percent increase from the previous quarter and a 16 percent increase from the first quarter of 2009. One in every 138 U.S. housing units received a foreclosure filing during the quarter.
Foreclosure filings were reported on 367,056 properties in March, an increase of nearly 19 percent from the previous month, an increase of nearly 8 percent from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005.

California had the most foreclosures with 216,000, accounting for 23% of the nation's total. Florida was second with 153,500.
Nevada had the highest foreclosure rate for the 13th straight quarter at 1 in every 33 homes. Arizona was second with 1 in every 49 homes.

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The long-predicted and feared wave for foreclosures is now beginning to hit.

There is one report that Bank of America intends to increase its foreclosures by 600% over last year.
All of this is happening just as the federal Home Buyers Tax Credit is about to expire in two weeks, and the Federal Reserve just stopped purchasing mortgage-backed securities.

Interestingly, the Congressional Oversight Panel in charge of monitoring bailout efforts released their own report today about the Making Home Affordable program (HAMP).

In its April report, the body said that Home Affordable Modification Program was not working. “Treasury’s response continues to lag well behind the pace of the crisis.” The report added “As of February 2010, only 168,708 homeowners have received final, five-year loan modifications – a small fraction of the 6 million borrowers who are presently 60+ days delinquent on their loans.”
The premise of the Administration’s $75 billion program to slow defaults and foreclosures may be flawed at its base... Data from the Office of the Comptroller of the Currency and the Office of Thrift Supervision show that over half of the revised home loans are in default within a year. Payments that are 30 days late on altered loans given over the twelve months rose to 57% as of the late March report from the two agencies.

While the federal and state programs have managed to forestall hundreds of thousands of mortgages, it has managed to actually prevent very few. This is part of the reason why we are seeing the sudden surge of foreclosures as the long-delayed process finally winds down.

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The amount of bank-owned houses is enormous. The credit rating agency Standard & Poor’s estimates that if you include houses in the normal foreclosure process with the banks "shadow inventory", it would take nearly three years to clear at the current sales rate.

As for the total amount of homes in the shadow inventory, Amherst Securities places the total at 7m...
With the launch of HAMP, servicers shifted strategy from liquidation to modification. The amount of loans that progressed from seriously delinquent to REO fell to 28% in Spring 2009 from 58% in June 2008. In that time, seriously delinquent loans that cured went from 32% to 58%, according to the report. But analysts found that this shift was only temporary.

The HAMP program has numerous flaws. For instance, when it comes to the jobless it is worse than nothing.

Recent changes to the federal foreclosure-prevention program were billed as helping the unemployed, but in the long run, they actually make it harder for people without jobs to keep their homes.
When the new rules go into effect, unemployment benefits will no longer count as income for determining whether a person qualifies for a long-term reduction in their mortgage payments.

The Obama Administration originally said that HAMP would prevent 3 to 4 million foreclosures, but the new Congressional report says it will probably only reach 1 million, and that doesn't include home owners that can't keep up with modified payments.
Proof that the HAMP program has been a near total failure can be seen in this recent announcement from the Obama Administration.

Got any ideas for how to remake the U.S. mortgage market? The Obama administration wants to hear them.
The administration on Wednesday published a list of seven questions about how to remake the institutions that provide money for home loans. The idea is to get comments from banking and securities industry groups, academic experts and consumer organizations.

The mortgage market froze up in the summer of 2007. The foreclosure crisis began even before that.
And now, after all this time, the government is finally looking for ideas? How pathetic is that?



there are mixed messages going on from BoA too

I saw a report link here that BoA is going to increase foreclosures 600% in 2010. Yet, supposedly before Congress, the claim is they will be open to principle reduction.

(you might use EP posts on these topics as references btw)

So these banks are talking out of both sides of their mouth.

It seems the game has been to get people to continue to pay, get just a little more money out of 'em, and also delay dumping more distressed properties at once onto the market, (what's the shadow inventory these days?) ...and it's all just a bunch of delay tactics.

It seems almost the agenda is to foreclose. I also hit upon something mentioned in the COP report, but I believe some blogger somewhere has gone into way more detail and it amounts to it's more profitable for banks to foreclose. I didn't follow through on it, but is that the situation here and now we have yet another profit agenda...

putting families out into the street because it makes more money? (anyone have some of those silent movies with the evil landlord throwing out the widow with her kids out into the street in the dead of winter?)

So what can we do about the mega-banks?

Move our banking business to sound community banks and credit unions. I terminated all my banking business with B of A yesterday, and when I told them why (sleazy abuse of power by the mega banks, such as helping Greece hide its debt, which wasn't B of A but one of the others, I know) eyes went wide like it was the first time they had heard of such a thing. Of course they remained completely courteous, being well-trained in that regard, and I stressed that the things I was complaining about were happening well above their level. The branch manager, a young Asian, seemed interested in what I was saying, so I gave him this (EP) website - even wrote it down at his request. He honestly gave me the impression he was hearing about this for the first time. Wider dissemination is key, but I don't know how to accomplish it.

Ray Joiner

while I've been "moving my money" as best I can

The actual movement I believe was started by a union and promoted by the Huffington Post.

I agree, just move your money out of there but even better, I've just found better rates, services and so on from credit unions.

Good for you though! I think that move as a protest is a great one.

To be honest I must admit...

...I didn't come up with the idea on my own. I first heard Rebel Capitalist talking about it.

Ray Joiner

If you do not pay your

If you do not pay your mortgage you are stealing from someone - you dumbass. Some one gave you money, and you promised to pay them back. Then you do not pay them.

Banks? Really? They are just buildings. That money you stole belonged to your neighbors.

Simple enough for you? Or do I need crayons?

The honorable thing to do is move out of the house.
And beg forgiveness.

And not give excuses on your way out. It only demeans you more.

To Anonymous Drive-by on Mortgages

While you make good points about our moral responsibility to fulfill contracts we enter into, you ignore the other side of the coin. And that other side is that financial institutions knowingly gave loans that they knew were not viable, thus endangering not only their own financial well-being but that of the nation as a whole. There used to be a certain level of trust which people had in their banks. Sure, I know, caveat emptor, but when a bank is presenting something to an individual as a "legitimate" transaction, and when it is nothing of the kind, then it seems to me there is dual fault to be assessed. The fact that banks have buildings does not mean that "They are just buildings". Banks are part of the financial oligarchy and their upper management consists of people, not buildings, and they have been guilty of sleazy abuses of power, succumbing to greed (a human trait) because there were no appropriate regulations to prevent it. I am a fan of individual responsibility, but think for a moment what you would do if you lost your job and you cannot sell your house because the sale price will bring only two-thirds of the mortgage balance. What would be your options at that point, oh great moralizer? And you still claim that the bank which should have foreseen this is free of guilt?

Ray Joiner


This article is good evidence of why HAMP is failing.

Consider that, in February, there were 170,000 “permanent” loan mods and, last month, another 60,000 joined their ranks. A quick calculation reveals that, in order for the new graduates to raise the overall median from 59.8 percent to 61.3 percent, the median back-end debt-to-income ratio for the next 60,000 had to be somewhere around 65 percent!!
How can these people possibly afford to pay their taxes, service their debt, and then have enough money left over to put food on the table and pay their utilities, let alone buy gasoline, clothes, and sock away a little money for retirement?
The government must be living in some kind of loan mod “bizarro world” to think that these “permanent” loans won’t go bad on a massive scale.

65% to mortgage

Really, I highlighted that in the COP overview of the report.

I've got one too. I am noticing that just to barely meet the basics is costing me an absurd amount of money. I wrote up all of those CPIs each month but something at least where I am in seriously wrong! I think I can blame health insurance the most, but truth is everything has gone up, including a horror show when I did my taxes to the point I got an extension thinking I have surely missed a host of things.