Foreclosures Resuming Again in Wake of Mortgage Settlement

The record $25 billion settlement approved in April between mortgage lenders and attorneys general from 49 states brought hope to many people with non-federal backed mortgages. Unfortunately, it also left many middle to low income people still tied to Fannie Mae and Freddie Mae in the lurch. What may be even more troubling, many mortgage lenders are speedily resuming the foreclosure process.

According to CNBC, initial foreclosure proceedings rose by 12 percent in May. Foreclosure sales, sometimes referred to as sheriff's sales in Minnesota, rose by 10 percent. Experts believe the reason for the jump has to do with the concrete guidelines for foreclosure process spelled out in the agreement.

As a result foreclosure starts, which are the first step in the foreclosure process, are back to 12 percent. The last time foreclosure rates were at this level was in the beginning of 2009.

Those who have fallen behind in their mortgage payments need not feel alone. Currently there are 5.5 million homes that are either in the foreclosure process or whose mortgages are delinquent and are headed that direction. Analysts expect most of these homes will ultimately go back to the bank.

So what is a homeowner to do? Bankruptcy offers a number of options for people who are either headed for foreclosure or for those who have already lost their homes to foreclosure. People in Minnesota who want to save their homes may find help in Chapter 13 bankruptcy. Thanks to a recent case, homeowners in the state are now eliminating second mortgages by stripping them off provided that secondary mortgage is completely unsecured.

Others, who are either giving up their homes or have already lost their homes to foreclosure or short sale may be able to avoid lawsuits from lingering lenders by filing Chapter 7 bankruptcy.

There is no such thing as a bankruptcy that is right for everyone, but there are different bankruptcies available for the unique needs of individuals. People find great comfort in speaking with an experienced bankruptcy attorney who can explain how bankruptcy works and review potential options with individuals.

Source:, "As Foreclosures Ramp Up, New Roadblocks Ahead," Diana Olick, 9 July 2012

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