Because of easy credit over the last few years, more and more home owners have been lured into excessive debt. Most of them got numerous credit cards, ran up their limits and then used their home as an ATM, by means of refinancing to pay off their credit card debt.

In those times lenders were not willing or motivated to work out any type of payment plan or solution to get home owners back on track and they actually preferred foreclosure, as they could foreclosure on a property and recover all the money they lent to the home owner including what ever junk fees they decided to tack on and then turn
around and sell the property for even more profit as the values of homes were increasing on what seemed like a daily basis.

If lenders did incur a lost, they could simply write it off as a bad debt and then they also get a tax break on whatever loss they ncurred.
However, with the collapse of the housing market and the current economic times, lenders have to make some changes. As today they are experiencing soaring foreclosure rates, as unemployment rises to levels not seen in decades and they are finding themselves in the home owning business versus the lending business as these homes are
sitting on the market and cannot be sold. A few reasons for this are there is less money out there to lend and tougher requirements to qualify for a mortgage today.

According to the American Bankruptcy Institute, there were 100,000 more bankruptcy filings in 2008 when compared to bankruptcy filings in 2007. There were over 2 million more foreclosure filings in 2008 compared to 2007 and more than 2.5 million home owners were more than 2 months late on their mortgage payments by the end of 2008 compared to 2007.

These statistics imply that foreclosures are causing a significant loss to lenders and this is why these lenders are trying to find ways to keep home owners in their homes and to keep them paying, even if that may require them reducing the balance owed on the mortgage. This was the goal of the Hope For Home Owners Program, which was created
as part of the Economic and Housing Recovery Act of 2008.

This program is off to a rough start as it is completely voluntary for lenders to participate and most lenders initially were reluctant to the idea of reducing the amount of the mortgage, however as
time goes by and foreclosure rates increase, these lenders will realize that this will become a necessity if they want o minimize their losses. As home owners that have good credit, make good money and have never been late are now walking away from their homes because they owe more than their home is worth and in some areas in Florida we are seeing property values drop in excess of $100,000.

Until lenders get more proactive and address the issue of negative equity, they will continue to see high rates of foreclosures as home owners feel trapped in a mortgage that cannot be refinanced and a home that cannot be sold through a normal sale process and
they may have to consider a short sale that will impact their credit negatively, lenders could come after the home owner for a deficiency judgment and to make matter worst they could have significant tax liabilities.