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June 26th, 2009

Please Foreclose On My House!



While it sounds improbable, some American homeowners are pleading with their lenders to ‘hurry up and foreclose already!’  Homeowners who have fallen months behind on their mortgage payments sit idle, ready to move on with their lives but are unable, just waiting for their lender to make the next move.

While this “financial limbo” has brought great reprieve to some delinquent borrowers who have benefited from the “rent-free” living, for others, the limbo is a time of added stress, emotional pain, and financial liability. But the limbo not only financially hampers borrowers and investors, it poses a threat to future recovery:

The overhang of homes in limbo means that foreclosure rates are likely to increase dramatically during the second half of this year and into 2010 as lenders work through the backlog, said Bob Bellack, chairman of Zetabid, which auctions foreclosed properties.

More than ever, foreclosure has become an unattractive outcome for lenders.

This could in turn put renewed stress on financial firms that carry mortgages or mortgage-backed securities on their books. As a general policy, many firms have been marking down the value of those assets as the loans become delinquent. But once the homes go into foreclosure and are sold, their value could decline even more, prompting another round of losses at financial companies.

However, lenders have become so swamped with foreclosure filings that they’re having a truly difficult time keeping up. Moreover, our nation’s dedication to foreclosure-prevention programs has redirected a lot of lenders’ and servicers’ attention away from repossessing homes to refinancing rates and modifying loans:

“Lenders are having an immensely difficult time handling the capacity. They are torn between loan modification, short sales, foreclosures, and they are finding they can’t do all these things at once, and do them well, so we’re seeing a lot of things falling through the cracks,” said Howard Glaser, a housing industry consultant and a housing official during the Clinton administration.

Those cracks must be pretty big. According to NeighborWorks America, a large housing counseling group, 60% of homeowners who miss more than four payments before seeking help will end up in foreclosure.

Is a swift foreclosure process the most clear-cut way to speed up the housing recovery? Or has delayed foreclosures (including moratoriums) helped ease the devastating impact foreclosures have on the market?

For more on the subject, read “Mortgage Moratorium Prolongs Housing Crisis.”

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3 Responses to “Please Foreclose On My House!”

  1. Alessandro Machi Says: June 26th, 2009 at 5:35 pm

    This flurry of prolonged foreclosure activity was brought on by the banks such as Chase Bank reducing equity lines to ridiculously low levels, and by the credit card companies, once again, Chase Bank in particular, raising interest rates to 29.99% AND RAISING MONTHLY MINIMUM PAYMENTS ON THEIR ALWAYS RESPONSIBLE, ON-TIME PAYING CUSTOMERS by 150% above and beyond what it already was.


  2. Tim Manni Says: June 29th, 2009 at 10:56 am


    I really wonder just how much of an impact raising the minimum monthly payment really had on foreclosures. We had a financial expert argue that rising the monthly minimum was a good thing for customers since it lowers the amount of interest you pay. You would argue otherwise?


  3. IT Manager Says: May 28th, 2010 at 7:05 am

    Bob Bellack is a con artist! To quote him is equivalent to quoting the village idiot!!

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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