According to the Mortgage Bankers Association in USA, about one million homes are in the state of foreclosure. A huge number of people have become homeless due to non repayment of home loans. The first quarter report published by the Mortgage Bankers Association has showed that the foreclosure process of millions of homes have been occurred in various states of USA in 2007.

Banks began to take back the property that was bought with borrowed money since the money was not being paid back as formally agreed earlier. The prices of homes sold in the first quarter have also declined in record numbers. Some of the states in USA which include California, Nevada, Florida and Michigan have exhibited the greatest decline in prices of homes.

According to the Mortgage Bankers Association (MBA), mortgage application volume also declined which has resulted into decline of home prices. People living in most of the states in USA have become homeless and the problem lies in the crisis of the economy. The trend of falling prices of homes also affects the banks and other financial organizations. They have to face a huge amount of loss and the situation is becoming worse day by day.

The rate of foreclosure of homes is higher in states like California and Florida while the Michigan and Ohio are the two states which have faced fewer rates of homes going to foreclosure. Americans have exhibited record rate of decline in home values as well as in the stock market. Considerable amount of damage caused in the stock market and in the economy of the nation. The overall disaster in the US market has damaged the economy, therefore affecting the banks and other financial organizations.

The prices of homes have fallen in 43 states including California and Nevada which faced huge losses with home prices. Due to such conditions, homes have become less valuable assets for the people of America as the nominal decline in home prices affected the economy nationwide.

Hence people are seeking help and call the foreclosure Help Line to take advice on how to save their houses. Various preventive steps have been taken to help the struggling homeowners. In order to offer prevention, mortgage servicers, the borrowers and the companies that manage the loans have taken steps together to fix up the rates of loans.

However to overcome this situation borrowers are coming up with various re-payment plans to the lenders, which might be going to improve the scenario in near future if implemented properly.

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If the current turmoil caused by the current foreclosure levels was not enough, here is some more potentially devastating news coming your way in the California real estate market. Soon to be released by DataQuick Information Systems, a new report is supposed to show a further rise in foreclosure activity in Southern California, with more homes going under the hammer over the coming few months.

Almost 40% of all homes sales are already foreclosed homes in March, and this trend is set to continue for some time largely due to further resets in home loans that are expected mid-2008. According to research done by Pew Charitable Trusts, which is essentially a non-profit organization looking to make policy changes in public policy, this increase in foreclosure activity is likely to continue for some time, and they are expecting one foreclosed home for every thirty-three homes in the country by 2009. If this seems shocking, then the rates in Southern California are expected to be even worse with one home in every twenty oing under the hammer.

Interestingly, the report also shows that people who are paying their mortgages on time are also likely to suffer due to further fall in property prices largely caused by excessive real estate inventory as a direct result of foreclosed homes. The report foretells a $107.2 billion fall in the sale of homes along with the tax base of the state by 2009 end. This makes it roughly $14,282 fall for every homeowner on an average.

Kil Huh of the Pew Trust says “At this point, given how severe the crisis is … we’re focused on the community effects that might take place.”, while Heather Peters, who chairs the Governor’s Task Force on Non-Traditional Mortgages wants to try and help people keep their homes as far as possible. She adds “There are a lot of people who were able to qualify and make their payments at the initial interest rates but could not afford the resets, and it’s better to keep those people in their homes.”

Further notes from the report mention that the high foreclosure rate is due to sub-prime loans, and almost a quarter of all of between 2005-2006 were all from this category. 64% of these borrowers are going to feel the foreclosure pinch at some time.

If you think the scene is bad in California, then Nevada is even worse off with one in every eleven homes likely to face foreclosure, adds the report. Arizona is the state with a home out of every eighteen homes likely to end in foreclosure. The state with the lowest foreclosure rate is expected to be North Dakota, which is likely to have one home in every 165 homes foreclosed.

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Many of the high prices demanded from the tenants over the past few years have led to many of the problems that have resulted in the present condition of foreclosures. As Rick Shraga of RealtyTrac observes on the staggering state of foreclosures, the full financing are only full of risks. Home prices keep falling rapidly relating to these problems all over again.

In Stockton, California, about 77% of homes have faced an underwater negotiation with negative equity. Stan Humphries, the vice president of data analysis of real estate at the website Zillow.com, has reported that the percentage shot up to 60% facing foreclosures in Las Vegas and above 40% in Miami and nearly 40% in Los Angeles. It is not just a problem with new owners, but plenty of owners who rode the boom have just plainly spent their home equities gains being unable to pay regular rents.

People have often faced being crashed-out on trying to refinance their homes in order to sustain their usual order of daily expenditures. Therefore, a house bought five years ago is facing lower pullout of home equity shares. Homeowner equity even dropped to a very low rate of 47.9% in the fourth quarter. As speculated by the Federal Reserve, the mortgage delinquency rate has been the highest so far since 1985. The rates of foreclosures had started as well as reached record heights very fast indeed. Counting the new delinquency rates of the foreclosure, the Chief Economist of Federal Reserve, Doug Duncan, has briefed in a meeting that about 7.86% of all people with a home loan, are late on mortgage payments. He concludes that as equity declines people are more prone to walk away. As most mortgage payments are “non-recourse” loans the lenders get to repossess their properties only after they can have no further claim on the borrowers’ wages or any other such assets.

Sharga even points out that the logical places for the most evident walkways are in the bustling market places, post the real estate boom period. The major players here are the states of California, Nevada, Florida and even Arizona foreclosure homes. People are most likely to have such actions taken in these places. A large number of properties bought in these states were done when the prices were not as high as the previous times. Sometimes candidates with zero or negative equity in their properties during the time of loan resetting are sure to walk away.

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People who are facing the risk of losing their homes to foreclosure are now going to be helped by the nation’s six largest lenders of mortgage loans. They gave in to pressure from the government in order to stem the flow of foreclosure and are now giving the defaulters a second chance to repay their loans. The borrowers will be given an extension of 30 days during which the process of foreclosure will be paused and the lenders will also be working on a new scheme of repayment. This project, called Project Lifeline has been launched for defaulters who have not paid their mortgage for more than 90 days. These homeowners are on the verge of foreclosure and most of them have not yet contacted their lenders.

This project is not really a solution for the foreclosure crisis, but is more of a tool to keep the process on hold and give the lenders a chance to design a new plan of repayment. The Mortgage Bankers Association declares that around 1.3 million homes loans are facing foreclosure. The Secretary of the Treasury, Henry Paulson, while announcing this program, said that this was mainly an effort to help out those American families who want to retain their homes. However, he added that the worst was just beginning, as subprime mortgage holders would come up to reset the interest rates.

The mortgage servicers involved with this project are Bank of America Corp, Citigroup Inc, Washington Mutual Inc, JP Morgan Chase & Co., Countrywide Financial Corp. and Wells Fargo & Co and these constitute of 50 percent in the mortgage market. Paulson says that the project’s aim is to ensure that all the people facing foreclosure will be alerted and they will ask for help without any delay. However, many people feel that this program is not enough. James Carr, the chief operating officer, National Community Reinvestment Coalition says that the program thinks that most borrowers are not contacting the lenders and asking for help.

This is not true as there are people who are asking for help but are not getting it, as the lenders are too overwhelmed to do anything. Another issue is the decreasing home values. Just modifying a loan does not help the bigger problem of the loan being much more than the home value that has been updated. Thus, this program is just delaying the process of foreclosure, which is eventually going to be inevitable. People are still hoping that things will look up.

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