In a previous post, we mentioned that increases in home equity and housing market numbers statistically place borrowers at a lower risk of foreclosure. In short, if a homeowner has positive equity in her property, she’s likely to be in a position where she can sell the home, rather than be subject to foreclosure proceedings, if she can’t afford her payments. However, there’s another side to this coin. A recent article in DSNews.com suggested that the rise in positive equity that “has been cause for celebration among industry commentators,” often doesn’t have any relation to the level of financial hardship that many homeowners continue to experience.
If you are concerned about paying your mortgage payment, or if you’re currently facing foreclosure, it’s important to speak to an experienced Chicago foreclosure defense lawyer. Even though the housing market looks to be on an upward trend, the dedicated attorneys at the Emerson Law Firm know how difficult a foreclosure threat can be to struggling Illinois families. Contact us today to discuss your case.
Positive Equity Doesn’t Necessarily Equal Fewer Foreclosures
A recent press release from Fitch Ratings indicated that rising equity is “not much comfort to those who continue to struggle to pay their mortgages.” Naturally, as we’ve noted previously, equity does play an important role in borrowers’ actions and their ability to avoid foreclosure. Yet it doesn’t have a discernable impact on the underlying causes for a homeowner’s ability to comfortably make her mortgage payments. Indeed, many borrowers haven’t recovered from the housing crash and economic crisis—many remain without jobs, or without significant sources of revenue.
As a result, many of these at-risk borrowers are still winding up in foreclosure situations. In short, rising prices and equity increases don’t necessarily spell an end to the foreclosure crisis. Indeed, according to an article in Business Wire, “Fitch estimates that the percentage of borrowers entering foreclosure with positive equity has roughly doubled in the last two years.” Why is that? According to the article, “income and ability to pay are key drivers” in determining foreclosure risk.
Do some borrowers remain at greater risk than others? Can we identify any trends connected to rising equity and steady foreclosures? Fitch Ratings suggests that many of the recent foreclosures we’re seeing can be linked to residential mortgage-backed securities, or RMBS, loans.
But shouldn’t the growing amount of positive equity that’s accompanying higher selling prices be enough to cover these loans if the owners were to sell them? According to Business Wire, one of the primary issues is the age of the loans in question. Many of them were involved in previously unsuccessful loan modifications, and many of the homeowners have missed about two years of payments on their properties. As a result, equity increases aren’t enough to cover the amounts that many of these borrowers owe.
And while mortgage servicers have many tools to help struggling homeowners, their hands are often tied once those borrowers continue to miss “regularly scheduled mortgage payments” on their properties, “even after loan modifications involving significant rate reductions,” reported Business Wire.
Illinois Foreclosure Defense Lawyers Can Help
If you are at risk of foreclosure or have questions about obtaining help with your monthly mortgage payments, it’s never too soon to contact an experienced Illinois foreclosure defense attorney. Contact the Emerson Law Firm today.
See Related Blog Posts:Buying a House After Foreclosure