Moratoriums reduce foreclosure filings by 7% -- at least temporarily

Posted Dec 11th 2008 10:40AM by Lita Epstein
Filed under: Federal Natl Mtge (FNM), Housing, Recession, Financial Crisis

Finally, some good news for the holidays, but as always these day, with grain of salt. Foreclosure filings dropped 7% in November from the previous month according to RealtyTrac. That's one in every 488 households nationwide. It's up from last November's number by 28%. Most of the reduction in the number of foreclosures can be credited to the moratoriums on foreclosures by Fannie (NYSE: FNM) and Freddie (NYSE: FRE), as well as by some of the banks the FDIC took over.

Still, 78,179 families lost their home to foreclosure in November. That is down by 8% from the number of families that lost their homes in October - 84,868. A total of 1,014,618 homes have been lost because of foreclosure since this crisis started in August 2007.

You'll probably see more good news in December as the foreclosure moratoriums continue, but January will likely be another story. The idea behind these moratoriums is that people find a way to avoid foreclosure through mortgage modification or refinance. That may be true and possible when the economy isn't in the sorry state it is.

In fact, the number of people falling behind on their mortgages is up by 6.99% in the third quarter, and Credit Suisse predicts that the U.S. will see 8.1 million foreclosures by 2012 or 16% of all mortgages. This dramatic jump is seen because of the increasing job losses.

Credit Suisse's doomsday prediction may be proved false if the Obama administration comes through with its promised jobs creation plan. Many of the subprime loans that were going to fail have failed. We can only hope and pray that what is currently being done or being planned will work to stem the financial disaster we're facing.

Lita Epstein has written 25 books including "The 250 Questions Your Should Ask to Avoid Foreclosure" and the "Complete Idiot's Guide to Improving Your Credit Score."

Tags: fnm, foreclosures, fre, housing, intehnews, moratoriums, recession