As Ontario loan modification attorneys, we were disappointed to see a new report suggesting that the number of "underwater" mortgages in the United States has increased steadily in 2009. According to a Nov. 24 report from CNNMoney, 23% of all American borrowers, or 10.7 million, now owe more on their mortgages than their homes are worth. The report estimates that another 2.3 million borrowers are within 5% of having negative equity, bringing the total of threatened homes up to 28% of all active residential mortgages. The data comes from First American CoreLogic, an Orange County-based information firm not related to any bank named First American.
Not surprisingly, the majority of the homes affected are in states with high-value real estate markets, including California, which is 35% underwater. The article suggested that California and the other states, which include neighboring Arizona and Nevada, are suffering because of a particularly high proportion of option adjustable-rate mortgages, which can actually increase the homeowners' debt and create unsustainably high mortgage payments. These data are raising eyebrows because the high rate of negative equity suggests that more foreclosures may be on the way. That would reverse what some saw as a promising trend away from falling home prices, which has raised hopes of a recovery in the housing market. If home prices go up or remain flat, the article said, fewer homeowners are likely to be at risk of default or foreclosure.
However, our Whittier loan modification lawyers know that the health of the real estate market also depends on factors outside real estate itself. In particular, many published reports have shown that unemployment is an important factor in whether any one borrower can make mortgage payments. That means high unemployment rates -- which we're sorry to say we also have in California -- are likely to translate to high rates of mortgage defaults. Homeowners are also continuing to have problems when they contact their loan servicers about a potential loan modification, despite efforts from state and federal governments to give servicers financial and regulatory incentives to help. These, in combination with the high rate of option ARM loans in California, suggest that foreclosures are likely to remain high for the next year.
Howard Law LLP has an active practice helping clients throughout California negotiate loan modifications that help hold on to their homes. Our Torrance loan modification attorneys have had good luck winning substantial changes to our clients' loans, including changes to loan structures as well as dropped interest rates and increased repayment periods. That's true even when the borrowers have had no luck on their own. We believe loan servicers tend to pay us more attention because they understand that when attorneys call, a lawsuit may not be far behind. In fact, we start every new loan workout case by reviewing the record for predatory lending or unfair treatment, and we absolutely will file a lawsuit if necessary to protect our clients' homes and investments.
If you're facing default or foreclosure and your lender isn't responding to your calls, you should contact Howard Law as soon as possible. To set up a free, confidential evaluation of your case, you can call us toll-free at 1-800-872-5925 or send a message through our Web site.