The Current Situation
However, expert observers of the housing market describe such downturns as the lull before a renewed storm for several reasons.
- Recent legal action by the various states’ Attorneys General, regarding foreclosure practices, is likely to have had an effect on slowing the processing of foreclosures while a settlement was being reached.
- In addition, the complicated nature of the financial instruments underlying many thousands of mortgages makes execution of a foreclosure difficult, as “sliced and bundled” mortgages make ownership problematic
- Tight credit guidelines and the uncertainty of the single family home ownership market have also made mortgage companies reluctant to foreclose in greater volume on homes that cannot be resold.
- Finally, the job market is still a major factor contributing to home owners facing foreclosure.
Delaware has experienced 26,000 foreclosures in the past five years, and the number of homes sold at sheriff’s sales increased 35% from 2010 to 2011, according to a June 2012 announcement from the office of the Governor.
Some State Responses
The FY13 state budget includes $3.5 million for housing counseling and related education and outreach. The bulk of these funds will go to HUD-certified housing counseling agencies providing services to improve household financial wellness.
DE Emergency Mortgage Assistance Program (DEMAP) – Foreclosure Prevention
This statewide program, operated by the Delaware State Housing Authority (DSHA), offers homeowners with assistance in preventing mortgage foreclosure on their primary residence due to a loss of 15% or more of their income.
Financial Fraud Investigation and Enforcement
This is a continuing initiative of the Delaware State Attorney General’s office.
Legal Representation for Borrowers
Support in the form of legal representation for borrowers facing foreclosure can help to make it more likely that homeowners will avoid foreclosure. Community Legal Aid Society, Delaware Volunteer Legal Services, and the Legal Services Corporation are providing this representation.
The new mandatory foreclosure mediation program creates a process by which homeowners are connected to housing counseling and provided an opportunity to participate in a mediation session prior to the Court entering a judgment of foreclosure.
Neighborhood Stabilization Program (NSP)
NSP has assisted communities that have been, or are likely to be affected by foreclosures, while providing affordable rental and home ownership opportunities to households at or below 120% of Area Median Income. DSHA has used these funds to provide mortgage and down payment assistance to home buyers purchasing foreclosed homes in targeted census tracts and to develop rental housing for people who have a disability, with incomes at 50% or less of median income.