The Associated Press has posted an article about the drastic increase of foreclosures so far this year. In just the first three months of 2010, a “record number” of homes were foreclosed. More homes were seized by banks and put into the category of foreclosure sale than in any other quarter since January 2005.
This sudden rise is due to banks beginning to tackle the massive backlog of troubled home loans that have been piling up waiting to be processed. It’s estimated that banks will repossess between 900,000-1 million homes this year alone, or about 1 in every 138 homes.
Foreclosures began to ease last year as banks came under pressure from the Obama administration to modify home loans for troubled borrowers. In addition, some states enacted foreclosure moratoriums in hopes of giving homeowners behind in payments time to catch up. And in many cases, banks have had trouble coping with how to handle the glut of problem loans.
These factors have helped slow the pace of foreclosures, but now that trend appears to be reversing.
The Obama administration’s foreclosure prevention program has only helped a small number of homeowners. Only 231,000 homeowners have completed loan modifications through the program, which is just 21% of the original 2.1 million people who signed up for it last year. Another 158,000 homeowners have dropped out of the program by failing to complete paperwork or not making payments, which is up from 90,000 just a month ago. The administration has since “expanded” the program, but the new details will take months to hammer out.
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