Foreclosure filings were reported on 937,840 properties last quarter.  According to RealtyTrac, foreclosures in the 3rd quarter of this year increased almost 23% from last year and are expected to accelerate in 2010.  The national numbers hide the severity of the problem out west, especially in California.  Nearly 25% of all foreclosures occur in California.  California, Florida, Arizona, Nevada, Illinois and Michigan accounted for 62% of the nation's foreclosure activity in the third quarter, according to RealtyTrac.

The wave is said to be driven by rising unemployment and more adjustable-rate loans resetting to higher monthly payments. Ya think?

This is no surprise from our view on Main Street.  The crisis has been moving up the food chain over 2009.  More and more middle and upper middle class are contacting our office looking your legal and financial solutions.  For some, the simplicity of filing Chapter 7 is not an available remedy.  The changes to the bankruptcy code, paid for by creditors and contained within the  2005 reform act means that a 5 year Chapter 13 plan is the only BK option.

That there is more to come is no surprise...but there is more to it then unemployment and rate adjustments.  It is well known that many lenders imposed a foreclosure moratorium and have attempted to control the REO inventory so as to keep prices artificially high.  Some clients have remained in homes, or have collected rents on second homes, for over a year without paying a dime.  Many of the moratoriums have been lifted and some banks are moving to re-start the foreclosure process.  Lenders like the former Indy Mac, now Bank One West are especially aggressive about sales as of late and are refusing postponements.  Bank One West has a new financial incentive to foreclose.  Pursuant to a sweetheart deal with the government, tax payers have to share in the foreclosure losses on Bank One West's for a set period of time.  The losses are also insured so that Bank One West will actually make money on the eventual REO sales of these homes.

For consumers, this would be a great time for our representatives in government to revisit judicial loan modification in Congress.  Changing the bankruptcy laws to restore residential cram down would keep families and communities intact rather than create a profit opportunity for the financial community that created the framework to allow this crisis to occur.  This is unlikely, as the financial industry seems to have substantial influence on our representatives on both the state and national level.  Case in point: the recent passing of SB 94 which effectively hampers a borrower's ability to retain competent legal counsel to pursue a loan modification was sponsored by legislature's who receive substantial campaign contributions.  Money talks.  So much for the government being "for the people".