A Record Number of Properties nationwide going into distressed property process.

The number of foreclosures fell in August after a record high in July, However, there are a record number of properties nationwide going into the initial distressed property process. 

The federal Making Home Affordable plan launched in March has signed more than 360,000 borrowers. Under the plan, borrowers work with 48 mortgage companies to bring mortgage payments to 38 percent of a borrower's income. Additional government help brings the cost down to 31 percent of income. Getting approval through this program is time-consuming and loaded with red tape.  

The program, which has a three-month trial period for those who sign on, allows borrowers who pay on time to potentially sign on for five years of lower payments. Some homeowners are reluctant,  because they fear in three months the payments could go back to a level they can't afford if the five-year extension is not approved by Congress.

Many more distressed properties expected to hit due to Option Arm resetting, Interest only loans hitting the end of the I/O period. I feel we still have another couple of years before we see improvement in the numbers of distressed properties.