Need Grows for Talent amid Rise in Bankruptcies, Loan Workouts
Bankruptcy filings in the U.S. were up 33% in June compared to a year ago thanks to the slowing economy and turmoil in the housing market, according to RiskCenter. Moreover, they are currently on track to surpass one million in a year for the first time since bankruptcy laws were tightened in October 2005. Companies filing for Chapter 11 reorganization also rose at an annual rate of 34% above the 6,241 filings in 2007.
Meanwhile, U.S. foreclosure activity in June dropped 3% from the previous month, but it was still up 53% from a year ago, according to the RealtyTrac U.S. Foreclosure Market Report. While the small decrease last month may lead to speculation that the upward trend in foreclosure activity may be nearing an end, RealtyTrac CEO James J. Saccacio, points out, the year-over-year change is a more indicative number of the overall trend. “The year-over-year increase of more than 50% indicates we have not yet reached the top of this foreclosure cycle,” he said.
“The Federal Reserve views the current high rate of mortgage foreclosures as an urgent problem,” Fed Governor, Randall Kroszner, said recently at a NeighborWorks forum in Cincinnati, reports the AFP. Kroszner has urged banks to adopt “workout arrangements” to help troubled homeowners stay in their homes.
Now as consumers struggle under the burden of rising household debt, growing mortgage problems and rising energy prices, loan workouts are also on the rise. Holders of securitized subprime mortgages are being urged to restructure or workout loans that are delinquent or likely to default.
After hitting a record high in April, loan workouts continue unabated in May. Statistics recently released by Hope Now, a group backed by the Bush administration to help stem the mortgage crisis, show mortgage servicers helped approximately 170,000 homeowners avoid foreclosure in May 2008. Since last July, HOPE NOW estimates that more than 1.7 million homeowners have avoided foreclosure because of industry efforts. According to HOPE NOW Executive Director Faith Schwartz, “As promised, the industry has accelerated the pace at which it is helping homeowners.”
Approximately 100,000 of the prime and subprime loan workouts provided by mortgage servicers in May were repayment plans, and roughly 70,000 were loan modifications.
Mitch Feldman, President of executive search firm, A.E. Feldman, says the trend is creating opportunities for candidates with expertise in underwriting, restructuring, valuation and loan workouts. Law firms around the country are also gearing up for the increase in bankruptcy filings. Many have already begun expanding their ranks, hiring bankruptcy attorneys and restructuring specialists. A.E. Feldman says attorney jobs are opening up for candidates with excellent academic credentials and a proven track record.
To learn more about these issues or inquire about existing and future job opportunities in restructuring, valuation and loan workouts as well as bankruptcy law, the lines of communication are open. Contact A.E. Feldman’s President, Mitch Feldman, and the firm’s expert recruiting team here.
