Orlando Real Estate News

Foreclosures and short sales in the Orlando area may continue at their current pace for some time as no government help is seen in the near future. According to John Schoen, Senior Producer for MSNBC.com, this past year has seen only failed efforts from quick fixes and loan modifications, increasing to 3 million the number of homes that have fallen to foreclosure nationwide since the housing crisis began. Although some easing may be provided by revised bankruptcy laws, an improved bailout program or another system proffered by the new Congress and Administration, there's little hope for immediate relief for those homeowners currently in trouble.

"Roughly one in 10 homeowners with mortgages are either in foreclosure or more than 30 days late in payment--the highest delinquency rate on record," Schoen said. "Without more aggressive measures, another 8 million to 10 millions foreclosures are forecast over the next four years."

A major problem with loan modifications in the mortgage industry today is the complicated system of bundling and selling loan packages to investors. In prior recessions, lenders held their mortgages and could work out new terms directly with their borrowers. Pooling and marketing loans has added more parties to the mix, and, in some cases, this has reduced the incentive to work with the borrower and keep the loan active. Instead, an investor or loan servicing company may see a higher financial return if a property goes into foreclosure.

Elizabeth Warren is frustrated by the lack of cooperation on the mortgage side. "Until we think in a more comprehensive way, we can't create solutions that will really make a difference," she said. Warren, a Harvard law professor, was named by Congress to chair a panel overseeing the bailout. "You have got to have the investor or their representatives come to the table motivated to do something," she said. "And that's currently what we don't have."

Congress is poised to authorize the next $350 billion in bailout funds but may change the targeted beneficiaries from banks alone to some type of foreclosure relief program. It's possible the loan modification process could be revised to include an incentive for servicing companies to work with borrowers. The "Hope for Homeowners" program, a foreclosure prevention plan, may also be changed to make it more attractive to lenders. And part of the economic stimulus program may extend the current tax cuts of $7,500 for first-time home buyers to include every home buyer.

While Congress considers solutions, time marches on, and it appears homeowners who are falling behind or already behind on their mortgage payments will be forced into a short sale or foreclosure long before any relief from the government comes their way.

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