First Six Months in 2010 528,000 homes taken over by lenders...

Many home owners have been fortunate enough to rent out space in their homes to have one or multiple tenants to assist with costs. Most the frills have been cut such as cable, phone service and catastrophic types of insurance such as earthquake and many have even had to cancel their life insurance…mostly to just meet their monthly mortgage payments. With the unsteady economy, loss of jobs, credit card crunch, and/or any number of life-changing events such as unforeseen medical expenses, homeowners are facing one of the country’s hardest hit times and struggling to make ends meet to keep their homes.

According to statistics it is estimated that more than 1 million American households will probably lose their homes to foreclosure in 2010 as lender are working through a huge backlog of those borrowers who have fallen behind on their mortgage payments.

During the first six months of the 2010 year, 528,000 homes were taken over by lenders. Just running the numbers if things continue at the same rate, the yearly numbers would result in more than 900,000 homes that were repossessed in 2009 according to RealtyTrac Inc., a foreclosure listing service. According to Rick Sharga, a senior vice president at Realty Trac, lenders have historically taken over about 100,000 homes a year.

Homeowners are finding it difficult to refinance their loans with lower rates and payments as lenders are taking a much harder line in the qualification process and being cautious during stressful and unknown times in the economy, not wanting to add to their high back-log of inventory on the books of foreclosures.

It seems that banks are creating two classes of troubled homeowners: Those who are falling behind on their payments but being allowed to stay in their homes longer since lenders seem to be reluctant to add to the current surplus of foreclosed homes currently on the market. However, at the same time lenders are stepping up repossessions so they can clear out the backlog of bad loans.

The banks are in control of the timing in the process as to how fast things get done to ultimately manage the inventory of distressed assets on the market according to Sharga.
According to Lender Processing Services inc., who tracks mortgages, overall in working with short sales and foreclosures, it takes about 15 months for a home loan to go from being 30-days late to the property being foreclosed and sold.

Again according to reports, legal warnings issued to homeowners climbed the first half of the year to 8 percent from the same period last year and dropped 5 percent from the last six months of 2009, according to RealtyTrac, which tracks notices for defaults, scheduled home auctions and home repossessions.

Between January and June of 2010, about 1.7 million homeowners received a foreclosure-related warning, one of several steps in the foreclosure process which translates tone in 78 homes in the U.S.

Nevada posted the highest foreclosure rate in the first half of the year. Arizona, Florida, California and Utah were among the other foreclosure hotbeds. But the problem stretches to all parts of the country.

If the economy doesn’t worsen, RealtyTrac’s Sharga projects lenders won’t work through the backlog of distressed properties until the end of 2013. More than 7.3 million homes are in some state of delinquency, according to Lender Processing Services. It seems the fastest-growing group of foreclosures is coming from borrowers who took out conventional fixed-rate loans.
Experts say with this current trend, homes will continue to be pushed down in value.

Unfortunately foreclosed homes are usually sold at steep discounts, which drives down the value of surrounding properties. According to Celia Chen, senior director of Moody’s Economy.com, “The downward pressure from foreclosures will persist and prices will be very weak into 2012.”
Credits: Rick Sharga of RealtyTrac, Celia ChenMoody’s Economy.com, Real Estate Writer Alex Veiga, Ap Real Estate Writer, Lender Processing Services inc.