The reality of foreclosure
Brittney M. Walker | 7/28/2010, 5 p.m.
They say it has to get worse before it can get any better. But people are wondering when the tide is going to turn. Families all over the country are still suffering from a previous destructive presidential administration; we won't name any names, but you know who we're talking about.
Middle class Americans are rapidly being wiped out by everything from joblessness to foreclosure. Even with the President Obama's stimulus bill, homeowners are still being driven away from their personal sanctuaries, left to give up their American dream, and live from paycheck to paycheck.
According to RealtyTrac.com, in June 2010, one in every 411 homes nationwide received foreclosure notices and so far, California ranks fourth with the most foreclosures. One in every 194 homes in the state falls to the same fate.
President Obama recently introduced the Home Affordable Modification Program (HAMP) which is supposed to bring down the foreclosure rates by requiring banks to assist struggling homeowners.
The U.S. Treasury Department says that as of January of this year, nearly 1.3 million borrowers nationwide have received offers for trial modifications and more than 940,000 are currently in active modifications, with 116,000 being permanent. The numbers have steadily increased since the government stepped in, however, the increase does not seem to be keeping up with the number of families that fall into foreclosure each year.
According to the Mortgage Bankers Association, every three months, 250,000 new families enter into foreclosure.
The other side to this story is that, many who have applied for a loan modification and are probably qualified are still going into foreclosure as they sit waiting to be approved.
The extended time homeowners sit and wait for a response for their loan modification applications from a bank has been a cause of hundreds of foreclosures lately.
Homeowners, accusing the institutions of not doing their jobs, have fiercely criticized Bank of America and several other major players like Chase Bank, CitiMortgage, IndyMac, and Wells Fargo for their poor response time and lack of effort.
Those pesky banks
In April, Hagens Berman Law Firm filed a class-action suit against BofA, claiming that the institution purposely slows or obstructs California homeowners who have applied for HAMP benefits by simply ignoring requests for loan adjustments.
"Rather than all allocating adequate resources and working diligently to reduce the number of loans in danger of default by establishing permanent modifications, Bank of America has serially strung out, delayed, and otherwise hindered the modification processes that it contractually undertook to facilitate, when it accepted billions ($25 billion) from the United States (government)," the suit states. "By failing to live up to its obligations under the terms of the agreement it entered into with the Department of Treasury, and the terms of the contracts it formed with individual homeowners, Bank of America has left thousands of borrowers in a state of limbo--often worse off than they were before they sought a modification from Bank of America."
The U.S. Treasury Department reports that BofA services more than 1 million mortgages that qualify for financial relief, but have granted only 12,761 of them permanent modification. As of January 2010, B of A has a 22 percent modification rate, which is actually an improvement since the end of last year.