Moratorium needed more than ever

Home foreclosures soared in April to a record-high rate. One of every 374 homes, or 342,000 homes in the United States, received a foreclosure filing: a notice of default, auction or sale notice, or bank repossession. Filings were up 32 percent from April 2008. (realtytrac.com)

This happened despite predictions by analysts of a lower rate for the month because of high foreclosure activity in March. Rick Sharga, a spokesperson for RealtyTrac, stated: “April was a shocker. ... We had been predicting 3.4 million filings for [all of 2009], but we’ll blow those numbers out of the water.” (cnnmoney.com)

Nevada is the hardest-hit state. One in every 68 housing units received a foreclosure filing in April, more than five times the national average. Filings in the state were up 111 percent from a year ago. In Las Vegas, one in every 56 homes is in foreclosure.

Florida has the second-worst rate in the U.S., with a 37 percent month-to-month increase in foreclosures and a 75 percent increase from last year. In the Cape Coral-Fort Myers metropolitan area, one in every 57 homes received a foreclosure filing during April. Foreclosure activity in April increased 31 percent from March.

California rounds out the top three states, with one in every 138 housing units receiving a foreclosure filing in April. Total foreclosure activity in California was up 42 percent from April 2008.

The six California metro areas of Merced, Modesto, Riverside-San Bernardino, Bakersfield, Vallejo-Fairfield and Stockton are included as having the top 10 highest documented foreclosure rates in the country. Las Vegas is on top, with Cape Coral-Fort Myers, Miami and Orlando, Fla., completing the list.

The top 10 states for foreclosure filings in April accounted for 75 percent of the national total. California had the highest total (96,560), followed by Florida (64,588), Nevada (16,266), Arizona (16,245), Ohio (12,324), Georgia (11,521), Texas (11,314), Michigan (10,830) and Virginia (6,254).

Filings overall were up 32 percent from April 2008 but rose less than 1 percent from March. At the same time, the number of bank repossessions, known as REOs, fell on a monthly and yearly basis, down 11 percent from March.

According to James J. Saccacio, chief executive officer of RealtyTrac, “This suggests that many lenders and servicers are beginning foreclosure proceedings on delinquent loans that had been delayed by legislative and industry moratoria. It’s likely that we’ll see a corresponding spike in REOs as these loans move through the foreclosure process over the next few months.”

Moratorium on foreclosures NOW!

What can stop the crushing home foreclosure crisis in the U.S.? The first thing that should be done by the Obama administration is a declaration of a state of emergency on the national level, or at least in the top 10 states wracked by the disaster.

The federal government easily steps in when natural disasters occur. When a federal disaster area or state of emergency is declared after a tornado, for example, part of the emergency measures include a moratorium on government-backed mortgage foreclosures.

The president is also empowered to take executive measures when a “man”-made catastrophe happens. The same actions should apply to the “foreclosure tsunami” engulfing the U.S. A moratorium on all foreclosures must be put in place immediately to allow homeowners a chance to save their homes.

The quasi-governmental companies referred to as Fannie Mae and Freddie Mac own half the residential mortgages in the U.S. Both were bailed out by the federal government in 2008 to the tune of at least $400 billion.

Fannie and Freddie, along with other major lenders, which include JPMorgan Chase, CitiBank and Bank of America, are required by federal law as well as by the terms of their bailouts and pursuant to the Making Home Affordable Program, to work out mortgage loan modifications. They are supposed to lower at-risk borrowers’ monthly payments, including property taxes and insurance, to no more than 31 percent of a borrower’s gross income in order to avoid foreclosure.

The South Carolina Supreme Court, on the initiative of Fannie Mae, recently issued a temporary restraining order on all foreclosures of participants in the Making Home Affordable Program, to give homeowners a chance to take advantage of the loan modification provisions.

This moratorium should be extended to every state for all loans covered under the Obama/Treasury plan. The moratorium should include unemployed workers’ loans, as well as those of seniors and disabled people, who are disproportionately affected by the foreclosure crisis.

Under the federal Making Home Affordable Program, an unemployed worker must verify that he or she will be receiving unemployment benefits for at least nine months in order to count those funds as income for purposes of negotiating loan modifications. Because of this, many unemployed workers are or will be excluded from being able to take advantage of the program. In a state like Michigan, where the unemployment rate is expected to hit 17 percent by the end of the year, this means unemployed workers who have exhausted or are soon to exhaust their unemployment benefits will continue to lose their homes at record rates.

In addition, Fannie Mae, Freddie Mac, the U.S. Department of Housing and Urban Development and all government agencies have programs or regulations mandating that tenants be offered rental options to stay in properties subject to foreclosure. These programs are routinely being ignored by these government bodies.

In Detroit, for example, Freddie Mac and Fannie Mae are the leading evictors of tenants, many of whom don’t even know that the properties have gone through foreclosure.

There should be an immediate moratorium on evictions of tenants in foreclosed properties owned or backed by Fannie Mae, Freddie Mac or HUD.

The twin catastrophes of high unemployment and delinquent home loans mean millions more workers still face losing their homes as the economic crisis continues. It is time for activists to continue fighting for and begin enacting a foreclosure moratorium on the street, in the neighborhoods and at every level of government.