Foreclosures expected to rise this year

COLUMBUS — More doom and gloom on the economic front: Foreclosure numbers in 2010 will top 2009’s results.

That’s according to the ominous-sounding Analysis of Mortgage Servicing Performance, Data Report No. 4, that was released this month by a national group focused on foreclosure prevention.

Ohio Attorney General Richard Cordray and 10 other attorneys general have been studying the foreclosure issue.

And their findings aren’t good.

“The data shows that one in seven borrowers is behind in their mortgage,” Cordray said in a released statement. “And hundreds of thousands of homeowners have adjustable-rate mortgages waiting to reset, ultimately sending even more into default.”

The group reviewed data from more than 10 million conventional mortgages and 3.8 million sub-prime loans. Among their findings:

USince October 2008, the number of homeowners more than 60 days late in making payments or already in foreclosure proceedings continued to rise, jumping 33 percent.

UDuring that time, 442,000 new loans joined the ranks of those considered seriously delinquent.

UThough sub-prime loans still make up the biggest share of delinquencies, prime loans jumped to 38 percent of the total as of October of last year, up from 17 percent in Oct. 2007.

UThe total number of homes in foreclosure jumped 52 percent between October 2008 and October 2009.

Making matters worse, only four in 10 seriously delinquent borrowers are involved in programs to help them avoid foreclosure.

Cordray and the working group are calling for increased efforts by loan servicers and government agencies — principal reductions in loan modifications and expanded counseling and foreclosure mediation services, for example.

That could help homeowners avoid foreclosure.

But, “If they choose not to, the picture is grim,” Cordray said.

Just how grim? According to the report, “One in four homeowners with a mortgage owes more than their home is worth. The unemployment rate is 10 percent nationally, with millions of additional Americans either out of the work force or underemployed. Hundreds of thousands of homeowners have ‘pay option’ [adjustable rate] mortgages that are ticking time bombs for payment shock, when these loans reset to much higher payments. Despite efforts of servicers, homeowners and the government, the foreclosure crisis continues to worsen. These signs point to more foreclosures in 2010 than in 2009.”

X Marc Kovac is The Vindicator’s Statehouse correspondent. E-mail him at mkovac@dixcom.com or on Twitter at Ohio Capital Blog.