During the first days of January, U.S. mortgage firm Fannie Mae and its sister company Freddie Mac extended to January 31 the suspension of foreclosure and eviction proceedings they implemented in December 2008. They are hoping that the extension would give more time for mortgage lenders and borrowers to work out a loan modification agreement that would be helpful to both parties.
Such hope was also in the minds of state officials in California, Massachusetts, Maryland and other states when they launched their own foreclosure suspension initiatives in December 2008.
But according to online housing research service Housing Wire, the suspension initiatives did not achieve their noble aims. What they accomplished was just to delay the time the homeowners experienced the full realities of foreclosure and eviction.
At the end of December 2008, California, whose Senate introduced foreclosure suspension Bill 1137 in 2008, was back to its high foreclosure level after experiencing a big drop when it suspended foreclosures in November. Notices of default jumped from 21,557 in November to 42,421 in December, an increase of nearly 25 percent over default notices in December 2007.
Sean O’Toole, head of California foreclosure tracking company ForeclosureRadar, said the default figures clearly showed that California’s Bill 1137 failed to make a dent on the foreclosure problem, although it had noble intentions. He said the bill failed to consider the reality that the average negative equity of home loans in the state has grown to $180,000. He reported that the average price of a foreclosed home sold in December was $283,624, with an average loan balance of $464,270. He also said that 249,940 foreclosure properties were sold at auctions in 2008, valued at a total of $107.8 billion.
After most foreclosure prevention efforts in 2008 failed, most homeowners are now pinning their hopes on Barack Obama who promised to help them during his first weeks as president.
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