Detroit Foreclosure Homes Highest in the Country

The number of U.S. Federal Housing Administration (FHA)-guaranteed loans that became Detroit foreclosure homes ranked the highest in the country with 2,656. The figures surpassed Indianapolis' 2,000 foreclosed FHA houses. However, while foreclosure properties in other metropolitan areas in the country have attracted buyers and investors, Detroit foreclosure homes remained on the market unsold for months or sometimes, even years. And industry experts are anticipating more foreclosures to flood the market following a Census Bureau report that Michigan was one of the five states that saw their personal income declined dramatically. The Obama Administration launched a program designed to help distressed homeowners who took out loans guaranteed by the FHA. So far, almost 850,000 borrowers of FHA-backed loans were behind on their mortgage payments or in some kind of foreclosure process. But the program is projected only to help about 45,000 troubled borrowers. The program is geared towards struggling homeowners who failed to qualify for other loan modification initiatives of the federal government. According to industry experts, the decision of the Obama Administration to limit the number of assisted troubled FHA borrowers indicated that the government wants to protect the financial status of the agency. In addition, the federal government wants to be realistic in its goals of providing help to troubled borrowers following the lack of results on its other mortgage modification initiatives. Recently, the FHA disclosed that its financial reserves declined below the mandatory levels. The drop was the first in the agency’s 75-year history. But FHA officials insisted that the agency do not need a financial rescue despite the increasing default rates due to rising unemployment, dropping home prices and values and unscrupulous lenders. Nationwide, nearly 17 percent of FHA-backed loan borrowers were delinquent or in some kind of foreclosure proceedings, compared with the delinquency rate of 13 percent for other loan types. The FHA plans to request for annual audits and to increase lenders' financial requirements. Additionally, it also plans to go after fraudulent lenders. FHA wants to help more troubled borrowers by modifying loans. However, its powers to modify more mortgages were hampered by the languishing economy. Market data showed that majority of FHA borrowers are located in states such as Ohio and Michigan, where the main problem is rising unemployment rate rather than bad lending practices. Start your Search for:

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