Foreclosures at Record Levels in April – Failure of Bankruptcy Legislation to Blame
By David Leibowitz, Illinois and Wisconsin Bankruptcy Attorney on May 13, 2009 in Featured, Foreclosure News
When the Senate voted against legislation which would allow mortgage modification in chapter 13, it gave a green light to mortgage foreclosures at a record pace. Now, the only people getting crammed-down are American Homeowners. Speed limits on foreclosure suits are gone. It’s pedal to the metal.
RealtyTrac reports that foreclosure filings in April broke all records. Close to 350,000 new foreclosures started in April – more than 32% than in April 2008. This means that in A alone, one out of every 374 housing units went into foreclosure last month alone, the highest rate since January 2005 when this report started.
While repossession fell, this only reflects delays in foreclosure because of statutory or voluntary moratoria.
Why is this happening? One thing is clear – the mortgage industry feels that it has a clear path now that debtors won’t have the right to modify mortgages in chapter 13. More and more real estate will be owned by lenders after foreclosure over the next few months. Desperate to put some positive spin on this, a representative of the National Association of Realtors suggests that all these foreclosed houses ”should continue be a boon for first-time home buyers.” What about the bane that it will be for all the families who will lose their homes and be put out into the street? Oh, I forgot, this will be a boon to owners of rental units. Give me a break!
The worst areas continue to be California, Arizona, Florida, and Nevada. In Las Vegas, one out of every 56 units went into foreclosure – almost 7 times the national average. Other areas in serious trouble include Cape Coral-Fort Meyers Florida, Merced, Modesto, Riverside-San Bernadino, Bakersfield, Vallejo-Fairfield and Stockton California. In each of these areas more than 1% of all homes went into foreclosure just in April, 2009 alone. Just think about what this means for neighborhoods and owners of homes not in foreclosure in these areas. Property values continue to sink and sink fast. Mortgage foreclosures hurt everyone – including the non-defaulting neighbor.
The Home Affordability and Stability Plan – the Obama Modifications and Refinance plans under “Making Home Affordable” sound good on paper. In practice, communities all over the country continue to be devastated by foreclosure. And plenty of lenders are not giving homeowners mortgage modifications. Instead, they are giving homeowners the finger. And you know which one.
Since, as Senator Durbin tells us, “The Banks own the Senate”, we can expect that this disaster will continue for months, if not years to come.
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