Statistics released by the Associated Press show that the foreclosure rate in Kentucky continues to remain alarming. During the first quarter of 2009, Kentucky foreclosures increased 10%, to 1,735.00, from the first quarter of 2008. Although foreclosures in March were down slightly from April, it is widely predicted that the numbers will increase substantially during 2nd and 3rd quarters.
For many Kentucky residents, loan modifications represent a way to avoid the loss of their homes. Recently, Kentucky has made efforts to encourage modifications. On January 5, 2009, the State issued a press release to publicize its agreement with Countrywide to require modifications:
Attorney General Jack Conway today announced a settlement resolving allegations of predatory lending practices against Countrywide Financial Corporation. Kentucky has joined other states requiring this sub-prime lender to provide loan modifications to assist up to 395,000 borrowers nationwide from a foreclosure relief fund of $150 million. Of this amount, $1.64 million is reserved for Kentucky borrowers. Approximately 2,500 Kentuckians will be offered loan modifications to restructure their Countrywide mortgage loans. Countrywide, which was acquired by Bank of America this past summer, has agreed to restructure more than $262 million of outstanding debt owed by Kentucky borrowers under this agreement.
In addition to the efforts by state government in Kentucky, the Obama administration has announced initiatives intended to promote mortgage lenders to approve loan modifications and requested short sales. Requests for mortgage modifications or a short sales are easier to submit than most homeowners believe, and offer a way for homeowners to avoid foreclosure.