Different Ways of Coping with the Mortgage Slump
Mortgage news this week painted a picture of a variety of ways people are attempting to cope with the mortgage slump:
- While the housing bill continues to meander its way through Congress, it apparently was not an urgent enough issue to get done before Congress adjourned for its Fourth of July recess
- Hope Now, a mortgage industry alliance, reported that it helped 170,000 homeowners avoid foreclosure in the month of May
- Further evidence that falling behind on a mortgage need not be permanent was seen in the fact that more that 40,000 borrowers who had been behind on their mortgages caught up in May
- The week ending June 27 offered a small sign of broader resiliency in the mortgage market, as mortgage application volume recovered slightly from the year-to-date low set during the prior week
Happy Fourth of July!
Congress did the patriotic thing at the end of day Wednesday: they went on recess. Meanwhile the long-awaited housing bill remains stalled. The latest wrinkle is an attempt to tack $6 billion in energy tax credits onto the bill. What does that have to do with slumping housing prices and rising mortgage foreclosures? Nothing really, but that’s the way the system works sometimes. Or doesn’t, as the case may be.
The message, though, should not be missed: Congress may or may not come through with some relief for mortgage borrowers eventually, but the real heavy lifting remains in the hands of the mortgage borrowers themselves. On this front, there were signs that people are succeeding by taking responsibility for their own problems.
170,000 Avoid Foreclosure in May
Hope Now, a mortgage industry alliance designed to help troubled borrowers avoid foreclosure, announced that it succeeded in helping 170,000 borrowers avoid mortgage foreclosure in May, through a combination of repayment plans and loan modifications.
While some critics carped that this number was down from the 183,000 helped in April, it is evidence that some people are finding tangible solutions to their mortgage problems. The key is people getting active and working with their lenders, sometimes with the help of intermediaries like Hope Now.
Catching Up on Payments
In a separate report, some 40,687 homeowners who had previously fallen behind on their mortgage payments were identified as having caught up on their payments in May. This is another glass-half-full/glass-half-empty situation, because the overall number of delinquencies continued to rise since an even greater number of mortgages fell behind during the same month. Still, it is a reminder that running into a problem with a mortgage does not always have an unhappy ending; often it proves to be just a temporary setback.
Application Activity
Finally, after hitting a year-to-date low the week before, mortgage application activity rebounded slightly, rising 3.6% in the week ending June 27, 2008. Of course, week-to-week activity is very changeable, and 3.6% hardly represents a robust rally. The point is though, that while the media are mostly reporting only the bad news about the mortgage market, it’s not all just a straight line downward. There are some legitimate signs of hope here and there.
Tags: 2008, borrowers, foreclosure, housing prices, mortgage application, mortgage news
