Happy holidays struggling homeowners! Fannie Mae, Freddie Mac and several large mortgage lenders have pledged not to foreclose on delinquent borrowers during the Christmas season.
For homeowners with loans through Fannie Mae and Freddie Mac, the moratorium will run from Dec. 19 to Jan. 2. During this time, legal and administrative proceedings for evictions may continue, but families will be allowed to stay in their homes, Fannie said in a statement. “No family should have to give up their home during this holiday season,” said Terry Edwards, an executive vice president for Fannie Mae.
Among some of the major banks that offer mortgage loans, Chase Mortgage said it will not evict anyone between Dec. 22 and Jan. 2. Wells Fargo will also suspend evictions during that period, but will not shut down its eviction machinery entirely. The bank said it will observe the moratorium on foreclosed properties in its own portfolio but for loans it services for other lenders “foreclosure-related actions may still occur. “Bank of America said that it would “avoid foreclosure sales or displacement of homeowners or tenants around the Thanksgiving and Christmas holidays. “ However, that policy only applies to loans the bank itself owns. Like Wells Fargo, it will also honor the wishes of the owners of the loans it services, which could mean moving forward with certain foreclosures.
A holiday halt on foreclosures by the major mortgage lenders could affect tens of thousands of homeowners. An average of 89,000 foreclosure auctions a month have been scheduled this year, according to RealtyTrac. Once a home has gone through that process, eviction is the next step. There could be a small handful of borrowers who might benefit permanently from the suspension, according to Daren Blomquist, a spokesman for RealtyTrac. Sometimes, albeit very rarely, a Christmas miracle will occur where a borrower finds the cash to get current on their mortgage again and keep their home. For the overwhelming majority of borrowers in default, however, “it’s a temporary reprieve, a symbolic gesture to help people out during the holidays,” said Blomquist. Then, come the New Year, everyone gets back to business, including mortgage lenders.
NEW YORK (CNNMoney) By Les Christie reports that as the foreclosure backlog continues to build up, delinquent borrowers are spending even more time in their homes without making mortgage payments. Once borrowers start missing payments, they spend an average of a year and nine months, or 611 days, in foreclosure before banks repossess their homes, according to LPS Mortgage Monitor. That’s more than twice as long as three years ago, when the average was 251 days. Earlier his year, the average was 523 days.
“The number of defaults in the pipeline has been huge and we had more problem loans than ever before,” said Herb Belcher, who supervises analytics for Lender Processing Services (LPS), which provides mortgage industry information and analytics to big banks. With so many bad loans, servicers have had to prioritize which ones they can deal with and which ones to push aside. “It’s like your boat has all these holes in it and is taking in water. You have to plug up the worst holes first,” said Belcher. Fannie Mae and Freddie Mac, which account for the majority of all mortgage lending these days, have been actively lobbying their industry partners — the servicers and attorneys who handle the foreclosure process — to either quickly get paperwork filed and push defaults through the system or put borrowers into a foreclosure prevention program, said Belcher.
The industry has gotten better at dealing with the deluge; it has hired staff and refined procedures to improve efficiency. But a return to more normal processing times will take time given the enormous backlog. There were more than 4 million homes either in foreclosure or 90 days or more late with payments in August. Many of the new delinquencies are actually repeats: About 75 percent of the borrowers who fell a month behind in payments in August had missed payments before and then caught up — only to fall behind again. On the plus side, the percentage of new seriously delinquent loans (90 days or more behind on payments) whose borrowers were up-to-date on payments just six months earlier has dropped to 1.4 percent from a peak of 2.9 percent in early 2009. Many of those borrowers suffered through severe financial reversals, such as a job loss. Foreclosure and unemployment rates generally move in lockstep with each other.
Fannie, Freddie and the big banks are all heart or are they just looking for a little good Public Relations? Regardless we are all for keeping people in their homes long term. There is some renewed optimism. Supposedly the unemployment rate is down. Hopefully it’s not just a seasonal boost from additional retail jobs. Locally there are multiple offers on property and a lot of investor opportunities. Take advantage of the affordability. Consult a Realtor and make buying a home part of your new year’s resolution.
Questions or comments can be made to Kerry Suess at email@example.com.