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Foreclosures: Rate as bad as during recession

poughkeepsiejournal.com | November 15, 2015

By Craig Wolf

One day recently Christian Knoeppel went to the Dutchess County Courthouse to watch his homeownership disappear.

It was an auction. For sale: One house near Hopewell Junction, by order of the court, to satisfy his mortgage debt.

This is what a foreclosure looks like.

Held in the back of the courthouse's first floor in a space called "the rear vestibule," there are no great formalities or comforts, just a simple transaction that takes the lawyers a few minutes.

"I went to that to see what was going on," Knoeppel said. "They were auctioning it for $285,000. That's what I owed."

"No one was there to buy," he said. Just the bank. He watched his title to the home be struck down and transferred to the lender.

That is how it usually goes. The bank takes the title and then tries to get what it can by selling the property.

There's still lots of this going on. Economists mark the start of the Great Recession as December 2007, blamed largely on the troubled housing market and its mortgage debt excesses, and they mark the recovery's start as mid-2009.

But there's still trouble. The Dutchess County Clerk's office statistics show that initial filings by lenders remain far above pre-recession levels and have barely come off the peak.

The first peak in filings came in 2009 with 1,628, not a surprise because of widespread job losses among homeowners. But the worst year was 2013, with 1,662 filings. The third-worst year was 2014, with 1,522 loans defaulting. This year looks like another bad one, with 1,198 filings for the first nine months. If that pace were to continue for the rest of the year, the total could hit nearly 1,600.

Not all of them will go the full road to an auction. Many will rescue their ownership and some will work out a deal with the bank, like a modification or perhaps a "short sale" where the lender lets them sell the house for less than the loan.

By comparison to pre-recession times, today's mortgage defaults are triple what they were in 2004, when 501 loans failed. And today's level is almost double the volume of the last year before the recession, 2006, with its 881 filings.

Why the surge now, eight years after the recession began and six years after it ended?

New York state tried to stem the tide of foreclosures. New laws forced banks to prove their cases clearly and give the debtors a chance to sit down with lenders and court-appointed referees and talk about possible solutions. It helped many homeowners, but skewed the statistics.

Those new procedures began in 2010 and were followed by a dip in foreclosure filings, down to 969 in 2011. But they've been on the rise since then.

 

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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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