It seems as though the banks are getting a little carried away with foreclosures these days. The Zerner’s, a couple in Arizona recently lost their home to foreclosure, whats interesting about their loss is that they were no longer behind on their payments. They had successfully carried out a loan modification and paid the necessary dues to Chase Bank. Chase now says that it was a mistake to have sold the Zerner’s house, and they are now reaching out to the couple with what the next steps will be.

Fannie Mae has plans to begin a program to help homeowners who have lost their homes to foreclosure. They will no allow these homeowners to rent their home back for one year. The program is designed to help those who do not qualify for a loan modification. This also helps the banks bring in money on homes that may just sit empty otherwise.

California Governor Arnold Schwarzenegger passed new laws that were designed to protect homeowners. Among the laws approved, there is one that restricts mortgage brokers from talking perspective homeowners into riskier, and high interest loans when the borrower qualifies for more an all-around better loan.

According to the Los Angeles Times here are some of the other laws the Governor signed:
SB 36,  by Sen. Ron Calderon (D-Montebello), sets standardized licensing requirements for all residential loan originators.

SB 239, by Sen. Fran Pavley (D-Agoura Hills), makes it a felony to commit fraud on a mortgage loan application.

AB 329, by Assemblyman Mike Feuer (D-Los Angeles), requires lenders to provide more, clear information to senior consumers interested in reverse mortgages.

SB 237, by Calderon, creates a registration program for appraisal management companies.

AB 957, by Assemblywoman Cathleen Galgiani (D-Stockton), allows buyers of foreclosed homes to choose local escrow officers.

AB 1160, by Assemblyman Paul Fong (D-Cupertino), requires that mortgage loan documents be translated into the language the verbal negotiations were conducted in.

Over a half a million homeowners have had their mortgages modified under the plan President Barack Obama began earlier this year. Treasury Secretary, Timothy Geithner said, “Unaffordable mortgages are now being modified at a pace faster than homes are being sold in foreclosure proceedings.” He also went on to say that 40% of the 1.2 million homeowners deemed eligible for loan modifications under the Obama plan have received them.

This is still a taxing process for many homeowners who still find themselves nearing foreclosure. So, although the administration celebrates this milestone they are still very aware that there’s much more to be done.

Foreclosures are a  continuous problem in our country, a growing source of foreclosures are homeowners who are “strategically defaulting.” Research has shown that the people involved in purposely defaulting are individuals which had high credit score when they applied for the loan, and not individuals who have low scores.

Research has also shown,  ” Strategic defaulters often go straight from perfect payment histories to no mortgage payments at all. This is in stark contrast with most financially distressed borrowers, who try to keep paying on their mortgage even after they’ve fallen behind on other accounts.” They also show that these types of defaults are popular in areas where the housing market boomed such as California, and most of these defaults take place on large loan amounts.

Where the housing market once boomed is now where is falters the most, this is especially the case the Las Vegas, Nevada. Vegas has been at the top of the foreclosure lists since the beginning of the housing meltdown, and it continues to be among the worst hit areas.

Recently DataQuick released statistics stating that Las Vegas home sales rose as investors and first time buyers take advantage of the low prices that have come from foreclosure sales. They reported that,  “Nearly 70 percent of the Las Vegas-area houses and condos that resold in July were foreclosure resales, meaning those homes had been foreclosed on in the prior 12 months.” This number seems very high compared to Southern California’s 43% foreclosure sale rate.

Through the Making Homes Affordable Program, many thought they found the solution to their mortgage troubles. Unfortunately it has proven to be a daunting process which leaves many homeowners losing the fight to save their home. There are over 4 million homeowners who qualify to receive assistance through the program, and of those 4 million about 230,000 people have had a loan modification completed.

Many are pointing their fingers to the banks. There has been a long list of complaints from homeowners who can never get a hold of a person at the bank, and if they do it is often not someone who can help them. The Kollars of Arizona are a prime example of this. They have done everything under the sun to get through to the bank, “Frustrated with the bank, Angela Baca-Kollar called the Obama administration’s helpline, 1-888-995-HOPE, but the representative told her that the hot line “can’t strong-arm the bank” and urged her to call a government-approved housing counselor.” It’s easy to see why so many lose their homes to foreclosure.

Many people are now trapped in a home they can’t afford because they went with an adjustable mortgage. An adjustable or ARM makes it so the rate starts off low, but can and will adjust later down the line. This kind of deal seemed very appealing especially to people who were looking to turn around and sell the properties with in a few years before the rates were to adjust.

Harvey Clavon is an example of this. He bought is Santa Clarita, CA home with the intention of selling it a few years later when he retired in Palm Springs. His once affordable payments are no longer easy to make, as his mortgage payments have risen to $2,700 a month because of a clause he did not notice on his contract, and are scheduled to rise above $4,000 in two years. On top of this the value of his home has decreased and the amount he owes has increased because he can only make the minimum payment. As a result many people are finding themselves facing foreclosure.

There was a new record set on the foreclosure front, and it not a good one. The number of filings went up in the month of July. “July marks the third time in the last five months where we’ve seen a new record set for foreclosure activity,” said James J. Saccacio, chief executive officer of RealtyTrac.

The worst hit areas are still the “Sand States” with California, Nevada, and Arizona being among some of the hardest hit.

Many homeowners have complained of the headaches involved with the loan modification process. Here is a list of reason as to why this process turns in to the long drawn out headache which so many have had to deal with.

1. Fax machines. Often banks and loan modification firms have homeowners send their paperwork via fax. Fax machines have a tendenacy of cutting off documents or skipping pages in long faxes.

2. Mulitple Forms. There are numerous forms involved in processing a loan modification, and the time that it takes to go through these forms not only slow down the homeowners, but also the banks, as they are inundated with these forms.

3. Outdated Documents. By the time banks get to the homeowners paperwork many of their pay stubs and documents are outdated and they need new records, again dragging out the process.

4. Poorly trained personel. As the loan modification business grows many peope are being brought on not having any experience, and with the influx of business there is  little time for actual training.

5.Unclear offers. Many homeowners are receiving offers they do not understand which leaves them unsure if they should move forward with the loan modification.

Needless to say there are many kinks that need to be worked out in this system.