Despite a recent uptick in prices, many homeowners who bought their homes a few years ago are still in tough shape. The market fell so far so fast, the economy has stayed so sluggish, that large numbers of Minnesotans still face foreclosure or are in need of mortgage modification.
To be sure, the most recent news on Twin Cities' real estate prices has been positive. According to the latest data from the Case-Shiller index at Standard & Poor's, prices of homes in the metro area are up 11 percent from November 2011 to November 2012.
National trends are also encouraging. Prices of homes in the U.S. increased by the most in 6 ½ years. In other words, they rose more than have since before the real estate crisis and the Great Recession hit.
But all is far from well when it comes to helping homeowners who are behind on their payments stay in their homes. Foreclosures rates may have peaked, but foreclosures are still common. Overall, nearly 4 million homeowners nationally have lost their houses to foreclosure since the crisis began. And as many as 10 million more homes are still at an elevated risk of foreclosure in the next few years.
Compounding the problem is the fact that federal programs intended to encourage lenders and loan services to work out mortgage modification have simply not worked very well. Loan services have often simply ignored programs like the Home Affordable Modification Program.
Of course, for homeowners who are underwater on their mortgages, refinancing is in theory an option. But many people do not meet the heightened underwriting standards to be able to pull that off. This is especially true of elderly people on fixed incomes, as well as for people who have suffered job loss.
In short, then, it is far too earlier to give three cheers for an end to the real estate crisis. Because it isn't really over.
Source: "Home prices rise in Twin Cities," MPR News, Annie Baxter, 1-29-13
Additional source: Mixed score on federal mortgage modification program," The Boston Globe, Michelle Singletary, 1-27-13
Our firm handles situations similar to those discussed in this post. To learn more about our practice, please visit our mortgage foreclosure and refinancing page.