In the third quarter, foreclosures were up, and loan modifications were down
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TEXT OF INTERVIEW
JEREMY HOBSON: New figures out from the government show just how much trouble the housing market still faces. In the third quarter, foreclosures were up, while help for distressed homeowners — in the form of loan modifications and principal reductions — were down. The report comes from the Office of the Controller of the Currency and the Office of Thrift Supervision.
And Marketplace’s Mitchell Hartman is following it. He joins us live with more. Hi Mitchell.
MITCHELL HARTMAN: Hi, Jeremy.
HOBSON: What does this report tell us about the picture as far as foreclosures are concerned as we end 2010?
HARTMAN: It says foreclosures were up more than 50 percent from a year earlier. Now these numbers are for the third quarter so that ended in September. More than a million homeowners are now in default. That meaning they’re late on their payments, there’s a fair chance at least that they’ll lose their homes. Meanwhile, the government’s mortgage modification program — this offers banks incentives to give homeowners lower monthly payments — that’s only helped about half a million homeowners. The original target was several million.
HOBSON: Mitchell we’ve heard a lot about that HAMP program and how much problems it’s been having. Is there any way to fix it?
HARTMAN: Well, it has helped some people. But it’s proven really difficult to keep most of these people in their homes. They’ve got second mortgages, they may owe more than their houses are worth — all that’s really complicates the paperwork. Quincy Krosby at Prudential Financial says the broader solution won’t be mortgage modifications, it’ll be jobs.
QUINCY KROSBY: If we do not get the unemployment rate down, those people who are in homes, they don’t have jobs, they’re exhausting all the money they have–whether it’s from their retirement, whether it’s from unemployment — they’re going to be forced probably to go into foreclosure.
And Jeremy, an Oversight Panel estimates that even among those who do get mortgages modifications, 4 out of 10 are ultimately going to redefault anyway.
HOBSON: Alright Mitchell Hartman, thanks so much.
HARTMAN: You’re welcome.
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