Lenders Moving to Stem Foreclosures

So far the housing slump, precipitated in part by overzealous borrowing and subprime lending, continues its downward slope.  In discouraging news for homeowners and home sellers nationally, a Standard & Poor's report recently said "the deceleration and declines in home prices are showing no signs of turnaround."

Even when the economy and the housing market are strong, some borrowers run into financial difficulty because of events such as job loss, divorce or illness.  Over the past year, two other factors have driven the rise in past-due loans and foreclosure filings:

One is known as "payment shock," when adjustable-rate loans reset sharply upward.  Lenders in recent years failed to consider whether the borrowers will be able to afford their loans once initial "teaser" rates adjust, critics charge.

The other is simply that a decade-long housing boom stalled out.  Some who bought homes near the market peak — often with no down payment — owe more than their houses are now worth.  So selling it offers no sure escape route from foreclosure.

Housing advocates say to beware of "rescue" scams, outfits that charge big fees and then fail to help people stay in their homes.  As more and more people face foreclosures, it's almost a given that scam artists will come out of the woodwork to prey on un-suspecting homeowners.

Impelled by financial and political pressure to try to curtail foreclosures, lenders are taking action on several fronts: