Foreclosure Starts on the Rise, Driven by Fannie Mae and Freddie Mac

From the Pennsylvania Save Our Homes Coalition (http://www.pasaveourhomes.org/):

Looks like the mortgage industry is ready to snake out a foreclosure pipeline clogged with millions of defaulted home loans.

Foreclosure starts on homeowners who have defaulted on their loans climbed 28 percent in January, to 203,458 from 159,092 the previous month, according to the LPS Mortgage Monitor, a housing report published by Lender Processing Services.

Most of the increase comes courtesy of Fannie Mae and Freddie Mac, the report says. Foreclosure starts on loans controlled by the government-owned mortgage companies jumped 60 percent in December. Foreclosure starts on loans controlled by all other investors — private, bank-owned, and Federal Housing Authority — were up about 10 percent.

A spokeswoman for the Federal Housing Finance Agency, the government regulator that has controlled the companies since they nearly went bankrupt in 2008, did not immediately respond to a request for comment.

The numbers seem to bring new urgency to a series of recent efforts by the Obama administration to throw a lifeline to struggling homeowners. In recent weeks, the government has announced an expansion of the Home Affordable Refinance Program, an opportunity for as many as three million homeowners with Federal Housing Authority insured loans to refinance at lower rates, as well as a settlement with five big banks over servicing misconduct that will provide $20 billion in principal write-downs and other aid to borrowers.

These initiatives, though, mostly provide assistance to mortgage holders who are current on their payments and are underwater. The outlook for most who are seriously delinquent, or who have stopped making payments altogether on their loan, is more bleak. Many of these homeowners do not qualify for government assistance, and in some instances, have not made payments for several years.

Read the rest of the article at http://www.huffingtonpost.com/2012/03/07/foreclosure-fannie-mae-freddie-mac_n_1327802.html

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