HREU Students…we have been preparing you for this for over a year now……get ready. The largest wave of foreclosures is just getting started:

Foreclosures have surged as the nation’s largest banks have lifted moratoriums put in place while the Obama administration hashed out its housing plan.

The president’s Making Home Affordable program requires banks to review all mortgages that are 60 days past due and, if it’s cheaper for the bank, to modify the loan rather than foreclose on the property.

But while those banks are now deciding which mortgages are worth modifying, a glut of homes are being moved to foreclosure.

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In March, the month in which most lenders lifted the moratorium, foreclosure filings were the highest on record – 341,180 foreclosures nationwide, according to Irvine, Calif.-based RealtyTrac, which tracks foreclosure filings.

“Since much of this activity was in new foreclosure actions, it suggests that many lenders were holding off on executing foreclosures due to industry moratoria and legislative delays,” James Saccacio, chief executive of Realty Trac, said in a statement.

On Long Island, foreclosures in the first quarter spiked 77 percent over the same period last year, with 943 foreclosures in Nassau and Suffolk counties, according to PropertyShark.com. Foreclosures on the Island had dropped at the end of last year, when several banks put the moratoriums in place.

Bill Staniford, chief executive of PropertyShark, said he expects foreclosures to continue to rise now that the moratoriums are gone.

“But we’re in a new political era and I am going to assume that the government will try to convince or coerce the banks to work out whatever possible to avoid that.”

The government has already said it will give cash incentives to lenders that participate in President Barack Obama’s program. On Tuesday, the government said it will also offer incentives to those that try to modify second mortgages.

Big banks such as Citigroup, Bank of America and JPMorgan Chase have all said they’ll participate in the housing program. Chase spokesperson Mike Fusco said since 2007 the bank has already modified 330,000 mortgages by dropping the interest rate, extending the duration of the loan or deferring some of the principal. Fusco added his bank expects to help at least 650,000 mortgages through its own initiative combined with the government program.

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But Sal Pane Jr., chief executive of Amerimod Modification Agency in Uniondale, called the government’s housing plan a flop and said he’s getting a slew of new customers who’ve tried the program with no results.

“Right when the stimulus came out our business dropped off the board, but the influx of people now far surpasses if we would have just kept up at the pace we were at,” he said.

That’s because, Pane said, the government’s plan requires individual homeowners to reach out to their lender.

Amerimod takes pools of mortgages in trouble that are able to be modified and uses the volume to entice the lender to take swift action, he said.

“There’s no way average homeowners can do modifications on their own,” he added.

Experts said it remains to be seen if foreclosures will continue to set records now that moratoriums are over.

Staniford said after the initial spike, he expects a steady rise through the end of the year.

The problem locally, however, will be the significant drop in demand for the vacant foreclosure properties caused by the recession and crash of Wall Street, he said.

“There is certainly some percentage of the financial industry in New York City that lived on Long Island and is now being forced to move out of the area,” Staniford said. “It’s going to dry up a lot of demand for housing on Long Island.”

Couple that with the glut of foreclosed properties and Staniford said home prices will drop another 20 percent locally before the housing market turns around.

“I think New York is in a uniquely bad position right now,” he said. “This recovery is going to be very, very slow.”

Source:Libn.com

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