Mortgage foreclosures hard to stop

As we have reported before, Congress killed the bill which would have given bankruptcy court the right to adjust the principle on residential mortgages (they can already do it for second homes and even yachts, but not residences). Congress said that the voluntary plans developed by both the Bush and Obama administrations would be be enough to get mortgages modified.  As we predicted they were very wrong.

The numbers are depressing. As reported in the Wall Street Journal, four million mortgages are now delinquent, the highest level recorded since Mortgage Bankers Asso. started keeping records in 1972. That is 9% of all mortgages outstanding.  Meanwhile, only 518,155 mortgages have been modified according to HOPE NOW a coalition of mortgage counselors.

Reasons for this include lack of staff at mortgage servicing companies and the complicated mess most of these mortgages have become.  The servicers probably do not own the mortgage as it was divided up and packaged into different “Collateralized Debt Obligations.”  Just finding the various owners can be difficult. And getting them to agree to lower their principle is often impossible. When a second mortgage (like a line of credit) is involved, everything becomes doubly complicated.

Since the mortgage servicing company gets small reward for modifying the mortgage but also gets paid if they foreclose, it is usually more profitable for them to proceed down that path rather than trying to get the various mortgage holders to agree.

All that said, there are some modifications going on and lots of FREE counseling organizations ready to help you try to get yours modified.  DO NOT waste your money on one of the companies that charge for this service.  Competent, free service is available.  These links are from our previous BLOG entry on Getting Help for Foreclosure Prevention.

A list of local counselors who will help you with foreclosure prevention is available at

You can also get names of approved  counseling organizations from the Hope website at or by calling the HOPE HOTLINE at 888-995-4673.

The Neighborhood Assistance Corporation does this work too.  They are at

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