Tipsheet: Foreclosure angles

The foreclosure tide rolls on across most of the country, with more homes being repossessed or put on notice. The numbers tell only part of the story, so look closer.

The latest report from RealtyTrac says 1.6 million properties were in some stage of foreclosure in the first six months of this year, an 8 percent increase from the same period a year ago. The pain is spread widely, with three-quarters of the biggest U.S. cities suffering more foreclosures. The only good news in the report is that in some of the hardest hit areas, the foreclosure rate isn't as bad as it was. But in cities like Las Vegas and Ft. Myers, Fla., the foreclosure rate is still higher than anywhere else.

Homeowners trying to avoid foreclosure were supposed to be able to get help from a federal program approved last year. But the Making Home Affordable program has not lived up to its promise, experts told Congress.

As the New York Times reports, "only 390,000 homeowners have seen their mortgage terms permanently modified...a small fraction of the three to four million who were supposed to receive assistance under the program." Why? Some critics say the program doesn't work as designed because it fails to give lenders enough of an incentive to modify mortgage terms so people can stay in their houses. Lenders in your area should be able to tell you how the program is working closer to home.

Another federal foreclosure program is under pressure because of impending "use-it-or-lose-it" deadlines. USA Today reports that local governments risk losing $1 billion in foreclosure relief money if they don't spend it quickly. The first installment of funds under the Neighborhood Stabilization Program had to be spent by this September. "The deadlines have forced some communities to shift their focus away from single-family homes and toward multi-family or rental housing to spend the money quickly and meet low-income set-aside rules," the paper writes. What's happening to these funds in your community?

Some states, like Nevada, have mediation programs aimed at helping borrowers stay in their homes. In Las Vegas, where one of every 15 homes received a foreclosure filing, KLAS-TV reporter Chris Saldana looked into how it's working:

Mortgage relief services are offered just about everywhere, of course, and not all offers are legit. The Federal Trade Commission banned eight more companies last week from providing services and ordered them to repay almost $30 million in fees collected from customers.You know those offers tacked up on telephone poles around town? Consider calling to see just what they're offering and ask regulators if they're on the up-and-up.

Not all homeowners facing foreclosure are living on the edge. Another report, from Lender Processing Services, says a record number of homeowners who once had the best credit and took out some of the biggest loans may lose their homes. As reported by USA Today, foreclosures for so-called prime conforming and jumbo loans are up between 400 and 600 percent since January of last year.

Many of those foreclosures may be "strategic defaults," said Ken Shuman, a spokesman with Trulia.com. That means borrowers stop paying mortgages they could afford to pay, because their home's value is less than the remaining amount on the loan.

The effect of the foreclosure crisis aren't hard to spot. Homes standing empty devalue neighborhoods. And when a lot of foreclosed houses go back on the market for sale, as is expected in the near future, home prices will likely take a dive. A new report from Altos Research says the housing market is going to be bleak for some time.

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