In the last couple months, banks have significantly stepped up their assault against homeowners who are struggling to meet their mortgage payments, which leads to the expectation that the final quarter of 2011 will feature a new wave of foreclosures.
For a while, last fall, foreclosures had begun to slow as banks began to take criticism for the way they handled foreclosure paperwork and responded to customer complaints. In response, many of the nation’s largest lenders ceased foreclosures entirely until the paperwork errors could be sorted out.
Now, according to the foreclosure-listing firm, RealtyTrac, the number of U.S. homes that received an initial default notice – the first step in the foreclosure process – has increased by 33 percent from July to August of this year. This jump represents not only the largest number in the past nine months but, in fact, the largest single monthly gain in four years.
Banks to Repossess 800,000 Homes End of the Year
Banks are now on a path to repossessing 800,000 homes this year, which is actually down from the over 1 million they repossessed before the slow-down last year. However, some states are under more pressure than others, and homeowners are strongly advised to consider foreclosure alternatives before the situation becomes too dire.
Mortgage rates are at an all-time low, so it can be worth investigating the possibility of refinancing down to a lower rate. For homeowners whose debt situation is a bit more severe, many banks will offer alternative settlement programs such as a deed in lieu of foreclosure or a short sale.