The mortgage meltdown took place five years ago, yet it still haunts many homeowners in New York and elsewhere. Many of these victims simply want a fresh start, but remain in limbo because lenders and the government have failed to resolve a legacy of abusive mortgage practices.
Foreclosures are stressful for New Yorkers who have the misfortune of going through them. Recently, some New Yorkers in need of debt relief received some good news - a check from the company servicing their mortgages. The checks came as a result of the federal government's attempt to ameliorate the foreclosure crisis.
Wrongfully foreclosing on homes has been pandemic in recent years. Readers of the debt relief section of this blog probably recall that several Wall Street banks unlawfully foreclosed on hundreds of service members between 2006 and 2010. According to the New York Times, those cases have finally been resolved.
Critics of Wall Street just received even more ammunition. According to the New York Times, big banks have even more problems than first thought.
In New York and elsewhere, December halted the downward trend in consumer borrowing. According to reports, consumer borrowing jumped nearly $15 billion from November to December 2012, the biggest monthly gain since November 2001. Student and auto loans drove the jump, with loans in those categories increasing over $18 billion in December.
Many New Yorkers likely heard about a recent deal by federal banking regulators with 10 banks. The regulators have claimed the $8.5 billion settlement as quick justice for aggrieved homeowners in need of debt relief, but some former regulators and consultants suggest that the deal is actually a band-aid to cover up a deeply flawed process.
In New York and elsewhere, foreclosure usually means walking away from a property. For some in need of debt relief, however, the foreclosed homes have refused to stay behind. For example, one man behind on his payments packed up and left when the bank sent him notice of a foreclosure judgment informing him the bank would put the property up for auction during a sheriff's sale.
While the economy and unemployment have stayed stubbornly stagnant, one thing has gone up -- home foreclosures. According to RealtyTrac Inc., a foreclosure listing firm, November saw a nine-month high in home repossessions nationally. The nearly 60,000 homes foreclosed upon and repossessed last month represented a greater than 10 percent bump from the previous month and a 5 percent increase from November of last year.
New Yorkers considering home foreclosure may want to keep in mind the expiration of a federal law passed in 2007 to help people going through foreclosure. Known as the Mortgage Forgiveness Debt Relief Act, the measure forgave federal taxes on any unpaid mortgage debt not recouped by a bank at auction. Starting January 1, 2013, however, people who foreclose will once again have to pay Uncle Sam taxes on the unpaid portion.
In an encouraging sign for the New York and national housing markets, a New York analyst firm reports that the number of U.S. homes that could soon come onto the market fell this year to a three-year low. The pending supply of homes, also known as "shadow inventory," dropped to 2.3 million units as of the end of July - down 10.2 percent from 2.6 million units a year ago.