Until the sweeping foreclosure problem is resolved, mortgage system woes will persist.

Problems with the Residential Home Foreclosure Sales

• The Falling Home Prices - More than 23% of home owners with a mortgage owe more on their loans than their homes are worth. Lenders won’t give new loans to people with negative equity and that leads to owners walking away, causing the lender to foreclose.
• Real Estate Residential Home Investors - More than 30% of properties in the foreclosure process are owned by someone who doesn’t live in the property, according to RealtyTrac. Programs that help home owners in trouble are not designed to assist real estate investors.
• Loan Modifications - A very high percentage of mortgages sold in the last decade have been packaged into securities and sold. Investors in these securities are hesitant to agree to loan modifications because it will mean a significant loss.
• High Unemployment - There will be many job losses. Unemployment is the main reason people can’t pay their mortgages. As the unemployment rate has risen above 6%, the percentage of mortgage delinquencies caused by job loss has risen to 45%.
• Mortgage Loan Modifications - Loan modifications don’t always work out. 1/3 of all subprime loans modified in the third quarter of 2007 were delinquent again within 10 months, according to a Credit Suisse report.