Foreclosures.....is there an end in sight?

It seems these days that everyone is talking about foreclosures. You can’t turn on the news without hearing about the rise in home foreclosures or the drop in the housing market. I didn’t pay much attention to it because I do not own my own home. Home foreclosures became a topic I learned very quickly when I got a job in a law office that handled bankruptcy and foreclosures for the banks. Yes, the banks, the evil institutions that the tax payers have to keep bailing out on a seemingly regular basis. One cannot realize the sheer magnitude of home foreclosures until you spend one day answering phones in a law office that forecloses on homes. It is heart breaking at times and the urge to become bitter is overwhelming. A lot of people got into this mess because they bought a home with an adjustable rate mortgage. For those that don’t know what that is, here’s a quick lesson. Basically you start out with a very small interest rate and then suddenly after 6-8 months, even a year, the interest rate explodes and your $600 a month house payment suddenly becomes $2000 a month. Other people lose their homes due to a job loss, illness, or other “life happens” moment. I’ve heard stories about people losing their job, having cancer, getting divorced or just getting in way over their head. For some people it is a relief to have their home taken away, for others it is devastating. When things go bad for a large number of people the government seems to step in and try to fix it. I use the term fix lightly. Right now in the state of Tennessee there is a law that was recently passed that basically makes the bank and/or firm handling the foreclosure give the mortgagor 60 days notice before they begin the foreclosure process. What that really means is that the bank and/or law office can’t set a date to sell your house on the courthouse steps for 60 days. The government has also taken action in encouraging loan modification companies. These are the people who you give your last $1000 and take their word that they will negotiate with your bank for a new rate and lower payments. There is a government website that promotes these loan modification companies. Here’s the problem: they are not regulated. No one is watching over these companies and quite a few of them have taken the money and ran. People call me to find out that their home was sold at auction and that the loan modification company took their money and they are now left with no money and no home. Neither one of these “government” solutions seem to be working. A lot of people don’t know that the bank WANTS you to keep your home and most times will work out a loan modification with you directly. The media and government are still painting the banks as being the bad guys. Is there a way to fix foreclosures?? At first I thought so but after this week I’m starting to wonder. A typical week at the firm brings in roughly 50 foreclosure referrals. This week I had right around 300 referrals cross my desk. Maybe there isn’t an end in sight. There isn’t really a win-win situation. The banks need their money and it seems that the people who go into foreclosure don’t have any money. The banks can’t certainly say “Oh well, maybe next month” or “ Don’t worry about it, we don’t need the money”. Hopefully we will hit bottom soon and things will start to go up. Will foreclosures ever end?? Probably not. Will they be this severe forever?? Let’s hope not.