Settlement Pushes Foreclosure Rates Up for the First Time in Two Years
A RealtyTrac report found that banks have resumed foreclosure proceedings on millions of homes following a settlement between banks and the states. This move has spiked foreclosure rates and may be harmful to the economy since as many as five million homes may be foreclosed upon by 2015.
Foreclosures and Home Prices on the Rise
In May, there was foreclosure activity on over 205,000 properties nationwide, up almost 10 percent from April's numbers. Lenders are feeling more confident pursuing foreclosure cases after the settlement because the ruling cleared up uncertainty surrounding foreclosure liability. Currently, there is a backlog of 2 million homes at risk of foreclosure.
In addition to the rise in foreclosure rates, nationwide home asking prices are also increasing. Between May 2011 and May 2012, home prices rose 3.2 percent to $194,900, while the number of homes for sale has dropped.
How Homeowners May Prevent Foreclosure
Fortunately, homeowners have several options that can help stave off foreclosure. Homeowners who fear foreclosure should speak with a foreclosure prevention counselor who can explain what options may be best for them. One option may be to refinance a mortgage for a lower, fixed rate, though banks have dragged their feet on offering refinancing to those looking at foreclosure. Homeowners should avoid loan modification schemes, since often modifications fall through or fail to occur at all, leaving homeowners in the same risky financial situation.
One option that may work well for homeowners facing imminent foreclosure is filing for bankruptcy. When eligible homeowners file for Chapter 7 or Chapter 13 bankruptcy, an automatic hold is placed on all debt collection, including foreclosure proceedings. This gives homeowners a break from foreclosure proceedings and allows families to stay in their homes through the bankruptcy process. Once the automatic stay is lifted, however, lenders can continue to pursue foreclosure proceedings if the debt was not dealt with in the bankruptcy process.
Homeowners underwater on their properties may face an increase in foreclosure rates over the next few years. If you believe your home may be foreclosed upon, please contact an experienced New Haven bankruptcy lawyer who can help you understand how bankruptcy may help you stay in your home.