Mass foreclosures soared 465 percent in August, September

We receive reports for our consumer advocacy and watchdog website Household – HSBC Watch. What we are hearing form homeowners does not correspond with what we are seeing in the news. The discrepancy prompted us to investigate. What we found is disturbing. The news seems to speak to investors and the stock market. Articles that claim foreclosures are down are sometimes false. Help from HOPE NOW may be misleading. Here is what we found:

For home loans classified as subprime, serious delinquencies – those over 90 days – were approximately 24 percent of all subprime loans. Foreclosures have been stalled because of court backlogs. That does not mean that foreclosures have declined. Quite the opposite is true. When discussions with HOPE NOW or a mortgage servicer begin, the loan is shown as 90+, not as an active foreclosure. It is misleading, since all talks do not result in a agreement.

We also found that many who have had foreclosure rescues will end up back in foreclosure within ten months, give or take. “Massachusetts provides a good case study, after a new law took effect in May requiring lenders to give homeowners a 90-day right to cure notice before initiating foreclosure. After being much lower than normal in June, July and August, initial foreclosure filings in Massachusetts soared 465 percent between August to September.” (see source)

The bottom line is that if you see analysts telling investors that subprime delinquencies and foreclosures have tapered off, please double-check your source. I think part of the news is designed to stop the market free fall, while other news is designed to pacify and placate consumers. The slant or intent of any news article goes well beyond what you read. Take, for instance, the difference when reporting the same news article in the Washington Post contrasted with the New York Times.

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