Whilst we may be reading about government initiatives to stem the flow of foreclosures for sale across the country, according to housing counsellors and government officials in Texas, the foreclosure process can be blindingly fast. Homeowners are being encouraged to talk to their banks at the first sign of any financial difficulty, but it seems that the foreclosures are happening too fast for some hardworking Americans to stop it.
Take the case of Forrest Brannon, a 78 year old homeowner from Dallas. Due to completely unforeseen circumstances his spending on health care increased unexpectedly and the interest rate on his adjustable-rate mortgage spiked very fast. Soon, before he could truly comprehend the impending impact, he was about to have his home repossessed. This is not an uncommon story across the State; as it seems the banks are looming like vultures, ready to prey on the vulnerable.
In some State, the foreclosure process is notoriously long winded, taking up to four month, but at least this gives borrowers time to renegotiate deals and actually converse with the banks and lenders; in Texas, the process can take as little as 41 days. According to a Department of Housing and Community Affairs report published in 2006, this is the fastest in the country.
Currently the legislation is so savage that a borrower only has 20 days to ‘cure’ a defaulted loan. The Attorney General is in the process of trying to extend this to 45 days. At present if the loan is not paid for 20 days then the home can be lost. These laws have been in place since 1984 and were not even changed after the 1988/89 recession crisis.
The trends across the nation don’t necessarily support longer periods to solve the problem. In California, where the figures are much higher for repossessions and foreclosures, there is a longer period of grace, yet defaulter numbers are still rising.
The Mortgage Bankers Association quoted 11.5 percent of sub-prime mortgages across Texas being in some stage of foreclosure, which is way up on 2007’s figure of 9 percent. The Dallas-Fort Worth area has more than twice the number of sub-prime problem cases than the whole of Houston and San Antonio combined. For Mr Brannon, his monthly repayments have increased from $379 to a staggering $700. Mr Brannon had to spend $3000 on dental work and after that his home became endangered as he received notice of default from the lender.
Not every tale ends badly however, and after reading about Mr Brannon’s case in the newspaper, John Thurston, a mortgage broker at Acceptance Capital Mortgage Corp. stepped in and solved the problem, obtaining a reverse mortgage for him from the federal government’s Home Equity Mortgage Conversion programme; not everyone is as fortunate as Mr Brannon.
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