Good Morning
Good Morning
ClassifiedsReal Estate

52% spike in LI foreclosure notices

Massapequa resident Lisa Mann, who faces the possibility

Massapequa resident Lisa Mann, who faces the possibility of losing her home, helps her daughter, Zoe, 7, with homework. (Sept. 15, 2010) Credit: Newsday / J. Conrad Williams Jr.

The number of Long Island homes added to the foreclosure pipeline swelled last month after a general decline, a listing service reported Thursday.

RealtyTrac said lenders put 1,230 borrowers in Long Island on notice about pending foreclosure proceedings, a 52 percent jump from July but a 13 percent drop from a year ago.

Lisa Mann of Massapequa said she was furious over last month's notice because she's in  a loan modification trial for 16 months so far, paying on time. That came on top of a shocker in April, she said, when she was listed as a credit risk due to being "late" on her mortgage. She said she and her husband were never late, even when his business fell on hard times, she said.

" 'I'm following what you guys told me to do,' " Mann said she told the lender, but the response was that her reduced trial payment was not the "original contract" amount signed at closing, a dilemma encountered by other distressed borrowers.

"I have three kids here, and I'm sitting here saying 'Are we going to stay? Are they going to be able to stay in their schools?' " Mann said. "Basically, I've been living for 16 months not knowing if I'm staying or not, but still making that payment they told me to."

Mark Rodgers, a spokesman for Mann's lender, Citibank, said borrowers are considered delinquent if they're denied a modification under the federal homeowners rescue program, as the Manns were, and are awaiting approval for Citibank's in-house modification plan.

Banks are allowed to start foreclosure cases, but not sell homes, during the loan modification negotiations. Once the borrower starts trial payments, the lender cannot begin a foreclosure case if one is not already pending.

Such stories darken any rosy hue in the foreclosure picture, including what RealtyTrac officials see as a general slowdown since last year in new cases launched.

August's bigger count in new cases can be a fluke, RealtyTrac and lenders' attorneys say, because past months' cases could end up being counted in August for various reasons.

But these new cases were the sole factor bumping up Long Island's foreclosure-related filings by 41 percent from July to August, the report said.

Still, the filings, including auction notices and bank seizures of homes, fell 9 percent from a year go, data show.

Nationwide, almost 390,000 homes got a filing of any kind in August, a 4 percent increase from July but a 5 percent drop from a year ago, data show.

"On the front end, seriously delinquent loans are rolling into foreclosure at an unusually slow rate, while on the back end the dammed-up inventory of properties already in foreclosure is moving to REO (bank repossessions) in a steady stream rather than a flood -- presumably to prevent further erosion of home prices," said James J. Saccacio, chief executive of RealtyTrac.

Generally, lenders have been doing more modifications, a less expensive option than  foreclosures.

Genworth, a major mortgage insurer, Wednesday said New York ranked fourth among states in mortgage dollars being rescued from the foreclosure process -- $244 million statewide in mortgages in the year ending in June, $89 million of that from 268 Long Island loans.

Latest Long Island News