The foreclosure process for many American homeowners has been interrupted repeatedly by federal and state moratoriums over the past six months. The two largest government-controlled lenders, Fannie Mae and Freddie Mac, in November imposed holiday suspensions of foreclosure-related evictions that were extended multiple times until March 31. At the urging of Congress, financial giants Bank of America, JP Morgan Chase, Wells Fargo and Morgan Stanley also agreed to suspend foreclosures of owner-occupied properties, until the Obama Administration’s loan modification strategy was defined.

As a result, there was a general lull in foreclosures while policymakers came up with mortgage-modification plans. But the moratorium has now been lifted by some of the nation’s largest mortgage companies, and they have begun determining which troubled borrowers are eligible for federal help and which to foreclosure on– and in many cases, it appears just delaying the inevitable.

The bad news is, foreclosures are back on the rise. According to a recent article in the Wall Street Journal, major banks such as JP Morgan Chase and Wells Fargo say they’ve been ramping up foreclosures in recent weeks. It is projected that more than 2.1 million homes will be lost this year because borrowers can’t meet their loan payments, up from about 1.7 million in 2008, according to Moody’s Economy.com.

The numbers for this year thus far continue to be discouraging. American families threatened with foreclosure grew by 24% this year, with the number projected to continue rising. Nationwide, nearly 804,000 homes received foreclosure notices in the first quarter of 2009, up from 650,000 a year ago.  RealtyTrac, which publishes data on foreclosures, said that 340,000 properties were affected, up 17% from February and 46% higher than a year ago.

According to the Wall Street Journal Article, on JP Morgan Chase:

The Oct. 31 moratorium delayed foreclosures on more than $22 billion of Chase-owned mortgages involving more than 80,000 homeowners. “We had stopped putting additional loans into the foreclosure process so we could be sure that delinquent borrowers would have every opportunity to take advantage of new initiatives that we were putting in place,” a Chase spokesman says. Borrowers who are now receiving foreclosure-sale notices, he said, “own vacant properties, have not been in contact with us and/or do not qualify for the modification programs.”

The fear is that the effect of the increased foreclosure action will be a further decline in housing prices. Readers, do you feel home prices will fall further as a result of the continued foreclosure actions?

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