Modifications Failed to Contain Houston Foreclosure Homes

In the second quarter of this year, more Texans have fallen behind on their mortgage payments. This created fear among industry experts who said that the increasing rate of delinquent loans could boost the number of repo homes in Houston.

Another great concern for industry experts is the failure of lenders to modify loans of distressed homeowners. Some troubled homeowners said that they have tried to get their lenders to modify their loans but they only succeeded in getting their lenders agree for moratorium on their bills.

According to industry experts, banks have the option to modify the loans of financially strapped borrowers. This means reducing interest rates or the outstanding loan balance. However, with the growing foreclosure rates not just in Texas but nationwide, lenders were pressured to modify an unprecedented number of loans.

The deluge of borrowers wanting to have their loans modified resulted in a backlog of cases and delays which cost many homeowners their properties.

Under the federal government’s loan modification program, homeowners whose mortgage payments exceeded 31 percent of their total monthly income can apply for a loan modification to reduce their payments.

In Houston, the loan modification program failed to provide relief to a growing number of distressed homeowners. In June, 1.1 percent of troubled mortgages were repossessed, a significant increase from the 0.8 percent reported in the same month last year.

On a year-to-year basis, the number of foreclosure filings reached 51,866 in Houston area, representing 142.1 filings daily. Comparable rate of foreclosure filings posted between July 2007 and June 2008 totaled 48,234 or about 132.15 daily.

Meanwhile, the mortgage delinquency rate rose in June with 4.9 percent of the total loans 3 months or more delayed compared with 3.4 percent reported in the same month a year earlier.

Statewide, the number of homeowners who missed their mortgage payments rose from April to June. Data showed that one in every 10 homeowners are either late in their payments or are in foreclosure.

As of June, delinquent residential mortgages in Texas accounted for 8.79 percent of the total home loans. In additional, 1.84 percent of mortgage loans went into foreclosure.

The delinquency rates in Houston and Texas are similar to the nationwide trend of increasing loan defaults in the second quarter. Of the total home mortgages in the country, 9.24 percent were delinquent during the period.

Related Posts:

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• Bill Proposing Moratorium on Foreclosures Met Several Oppositions
• Rising Foreclosures Despite Aggressive Prevention Efforts
• Homeowners Use Bankruptcy to Avoid Repo Homes Lists
• Repossession Houses Hold the Fate of FHA