When you read the newspapers and watch TV, you will hear commentators talk about the “foreclosure crisis.”   We have done some research and the statistics about foreclosure in Georgia and around the nation are unsettling to say the least:

• Nationally, one out of every two hundred homes will go into foreclosure this year (source: Mortgage Bankers Association)
• 43% of American households spend more than they earn each year (source: FDIC data sheet)
• 42% of American households do not have enough liquid assets in an emergency fund to last three months in the event of a job loss
• Most foreclosures are triggered by a job loss or a medical crisis (source: Homeownership Preservation Foundation)
• Georgia consistently falls within the top ten in terms of the number of pending foreclosures
• Georgia is second only to Tennessee in the number of foreclosures per resident – 5.45 per 1000 residents

The federal government has instituted several programs to help stem the tide of foreclosures, but these programs have had limited effect because most of these programs rely on voluntary actions by banks to refinance or restructure loans, and these mortgage lenders have not been enthusiastic about taking these voluntary actions.  According to the National Association of Consumer Bankruptcy Attorneys (NACBA), government foreclosure programs have done very little to reduce the numbers of foreclosures.

The HUD web site at http://portal.hud.gov/portal/page/portal/HUD/topics/avoiding_foreclosure offers a number of counseling resources and information pages.

Our experience at Clark & Washington has been that foreclosure prevention programs that rely on voluntary loan modifications by mortgage companies just do not work.   From our standpoint, the biggest issue has to do with time – it can take four to six months for a loan to be considered for a modification, during which time that loan grows more and more delinquent.  If the modification is refused or if the terms are not favorable, our client ends up looking at Chapter 13 to stop a foreclosure, but with an additional six months or more missed payments that have to be absorbed in the Chapter 13.

Our position remains – if you are facing a potential foreclosure, seek personal legal attention from a law firm like Clark & Washington that has your interests at heart and that understands the bankruptcy laws thoroughly.