Preparing for Foreclosure Spike
On average, 167,000 new families enter into foreclosure every three months. That is according to the Mortgage Bankers Association who also believe its just the tip of the iceberg. Combine $375 billion worth of loans adjusting to higher rates this year and $1 trillion resetting in 2007, with higher energy costs, higher homeowners’ insurance premiums, and higher property taxes, and you have a recipe for disaster.
Historically, borrowers have not viewed lenders as being very helpful when threatened with losing their home. Borrowers believe that the lenders make a profit from taking their homes when they can’t pay. As a result, they have remained reluctant to come forward and explain they are having problems. In fact, studies have shown that half of all borrowers in default have no contact with their lender, and two out of five who go into foreclosure never talking to their lender.
However, times are changing and lenders are attempting to reach out to borrowers in unprescedented ways by taking several proactive steps. Lenders are joinging forces with nonprofit counseling agencies to reach borrowers in trouble, running public service announcements, and even planting messages in a syndicated Spanish-language soap opera that contains ideas about what to do if you can’t pay your mortgage.
Freddie Mac EVP Craig Nickerson says the idea is to create a comprehensive safety net that will help people stay in their homes. They are looking upon this proactive approach as one of their focuses for at least the next five years.