Hurdles to resolving the foreclosure crisis

Even with loan modifications and refinancing programs moving forward, the end of the foreclosure crisis is not around the corner, a panel of government officials and consumer advocates told real estate reporters and editors at a recent conference.

Among the factors slowing progress are loan servicers still gearing up for the task, the recession and for-profit foreclosure prevention firms handing out misinformation.

With about three-quarters of mortgage servicers onboard, Deputy Treasury Secretary Seth Wheeler said the administration's loan modification program "is not performing up to expectations yet." About 150,000 trial modifications have been completed and, as servicers work to beef up their staffing and training, tens of thousands are in the works. The goal is 9 million reworked mortgages over the next several months, Wheeler said.

Economic conditions, however, are working against refinancing, said John Walsh, chief of staff of the Office of the Comptroller of the Currency.

"The continued decline in home prices of course makes refinancing more difficult," Walsh said. And unemployment is "only beginning to take its toll now." The agency is tracking data and will report on progress at the end of the month. A 52% failure rate was reported in the fall for mortgage modifications.

David Berenbaum, vice president of the National Community Reinvestment Coalition, called on newspapers to stop running ads by "for-profit racketeers who charge on average $2,900 to consumers for poor advice." Examples he cited included counsel to not pay the mortgage or contact the service provider. HUD-approved counselors will help consumers for free.

Among organizations administering foreclosure-mitigation counseling services is NeighborWorks America, a congressionally chartered nonprofit network of more than 240 community development and affordable housing organizations.

Ken Wade, chief executive officer of NeighborhoodWorks, said there needs to be "transparency on results" and more information on people who are getting assistance "to see what's working."

If the new programs can keep up with the changing nature of the nation's housing problems, he said, they "have a better chance at working."

-- Lauren Beale reporting from Washington

Thoughts? Comments?

Comments

[Danny]

Also not helping the foreclosure crisis: the fact that most people bought way more house than they could afford. No modification is going to help that. Also, the fact that half of the foreclosure crisis hasn't even started (i.e., Option ARMs and Alt-A's).

[David]

Finally we're talking about foreclosures again. The drop in RE values will not stop until we slow down or STOP unnecessary foreclosures. If the banks won’t do it...the government will have to.

[fezco (Monrovia)]

Crisis? What crisis? How's about the last 8 years of unaffordable housing. There's your crisis.

Now I do feel sorry for those who are being forclosed on because they lost their jobs, got sick, and got swindled.

I have no sympathy for those that knew the risks and gambled: flippers, and folks that used their HELOCs as ATMs to buy ski-doos, useless crap, and cosmetic surgery.

[lemonlou]

Stop changing the rules of the game. Every person you keep in a house they can't afford keeps someone who can afford it out. There is not responsible homeowner in trouble. A responsible would no refi to pay credit card bills or payoff a car loan or pay for vacation. A responsible person would refi to get their rate and payment lower they would not withdrawal equity. These people have spent their gain they just never sold the house.

[Stu]

High end house sales in the palisades are really picking up -

in the past nine days

981 Napoli in escrow for $6,295,000

714 Ocampo in escrow for $6,290,000

It is very interesting that high end sales in other good neighborhoods are still in the dumps - Bev Hills, Bel Air, Holmby are all suffering but the very high end of Palisades is active

perhaps a thread on why the Palisades is different than the rest of LA would be worth doing

[Steve]

The best answer.
Now I do feel sorry for those who are being forclosed on because they lost their jobs, got sick, and got swindled.

I have no sympathy for those that knew the risks and gambled: flippers, and folks that used their HELOCs as ATMs to buy ski-doos, useless crap, and cosmetic surgery.

We need case by case hearings. But lawyers just want a new monthly mortgage payment to defend.

You can have my home. It's already tainted.

U.S. Code Tilte 12 Chapter 29 Section 2803 "Maintance and public disclosure" (6) "Retention of records" Loan application must be filed one year after closing and on file three years following.
Show me where I lied! And I'll show you an Option-Arm broker who belongs behind bars. We want out of here as much as you want in. Gov. keeps coming up with modify rulings. Lenders just buy time combinding new late fees to new principal. We just sit in stress. Placed in a loan I never had the chance to repay. Underwater. Now unemployed. A large down payment. Thousands invested to improve home. All because brokers, lenders, and underwriters thought this was cleaver. With those examples, stand in our shoes. Rescind these fraudulant mortgages and you'll never hear from us again

[fredyt]

We need to stop playing games. The Mods haven't worked, the Bailout hasn't worked. A solid plan which I believe has the best merits to halt the crisis while getting our economy going is The Mortgage Holiday - contact your congressperson or better yet.......
http://saveoureconomy.com

[Anthrodiva]

Mmm, much as I agree that those foreclosure counseling folks are scammers, stopping grifters from parting fools from their money is impossible. Two, since when do we stop companies from advertising crappy products? I believe GM has been the #2 ad buyer for years now...

[Raffi]

Can the media stop with the bad assumptions already?

RENTING IS OK, it is not second-class housing!

Affordable home prices are ok! And we are not there yet, so why on earth this massive push to prop up prices artificially?

Seriously, the media needs to start reporting facts, not make bad assumptions about what is good for us. Let people who cannot even begin to afford the homes they managed to finance in the crazy days become renters, and let prices come down to where buying has some kind of a correlation to actual income.

[wrinkle]

If the new programs can keep up with the changing nature of the nation's housing problems, he said, they "have a better chance at working."

This caca is the problem. It's like having a program to keep the price of oil at $145.00 a barrel because it was good for Exxon's economy.

I don't think the programs can keep up with falling prices in a land of lost jobs and pay cuts. The problem - over priced homes must correct as did the tech bubble. These folks are living examples of the axiom "if your not part of the solution your part of the problem".

[fezco]

Fredyt,
Was the sarcasm button checked when you wrote that?
'One Year Mortage Holiday?' If you cannot afford your mortage today, what makes you think you can do it after a year? This will only delay the inevitable.

[JamesW]

This isn't a crisis, it's a party!

Let's keep it going! wanna see places like Riverside, San Bernardino, and Ventura counties affirm their trailer park status.

[Lou]

Much like the media helped sell the Iraq War to the public, they are now selling a so-called "crisis". The media has become a joke and a tool of the big corporations and government. How is this a crisis? Can someone please explain this to me? Like fezco said the real "crisis" were the unsustainable price run-ups that priced people out of the market led to insane amounts of consumer debt. Where was the media on that one? Oh yeah, I know of one newspaper that never did any investigative journalism during the boom even though the HQs of most of these lenders was in the newspaper's backyard. At the same time this newspaper had a fake section in the paper called HOMES where they probably got tons of ad money. Sound familiar. This is not a crisis but a correction.

[k2polo]

Modifications are a farce. Choose Foreclosure and take the credit hit..as counseled in a book of same title. Interesting read..I read over a year ago and it made sense even then. Only 36 months to repair credit..rent in the interim.