The nine banks involved are subsidiaries of FBOP: Bank USA in Phoenix, San Diego National Bank, California National Bank in Los Angeles, Pacific National Bank in San Francisco, Community Bank in Lemont, Park National Bank in Chicago, North Houston Bank, Citizens National Bank in Teague, Texas and Madisonville Bank in Texas.

“According to FBOP, it suffered huge losses in two areas: preferred stocks in Fannie Mae and Freddie Mac and bank foreclosed properties in the commercial sector.”

Read the full story here: CNN Money http://www.money.cnn.com/2009/10/30/news/economy/fbop_failure/?postversion=2009103023

The most common reason foreclosure procedures begin in underwater mortgages is because the borrower gives up hope and rather than paying for a home they feel they will never in return get what it was once worth, they simply stop paying their mortgage rather than ride the storm out.

Typically, borrowers fall behind on their mortgages after they lose their job, get a divorce, fall upon serious illness, or a death of a spouse. With the current foreclosure rates, those scenarios play a significant role but so does the fact that many homeowners reached beyond their means when buying their home initially and now can no longer afford to make the payments.

If you are sitting with property that is in a state of default and underwater, if you currently have a low fixed interest rate loan you have a valuable asset that will be hard pressed to replace on the current market so it is much wiser to maintain your mortgage payments if it means having to make uncomfortable cuts elsewhere. And even more so if your credit rate is still decent! Defaulting and ending up with a foreclosure will drastically drop your credit rate to the gutter. You can expect at least a 200-point credit score drop from your current credit rating if you are foreclosed on. Not only does this effect your credit but can make it difficult to rent a home after that and you may be required to put an upfront deposit on utilities when moving into a rental. In some situations, having a poor credit score has even prevented people from getting employment.

Creditors such as Fannie Mae will restrict a person who has faced foreclosure from getting a loan from them for up to five years after the foreclosure. In some sates, the lender can still go after the borrower with a deficiency judgment making the borrower pay for any unpaid balance on a mortgage after the foreclosure sale.

Rather than face foreclosure if you cannot ride the storm out, contact us here at 1st Foreclosure Prevention to see what options are available to you.