Research shows that the unwillingness of lenders to adjust the balances on homes that are worth less than the mortgage owed on them is one of the main causes of foreclosures, along with unemployment and other financial obstacles. But this unwillingness reduces after foreclosure, because lenders find themselves holding properties they don’t know what to do with, and don’t know how to manage.

Boston Community Capital, a nonprofit community development financial institution, noticed this behavior change and found a way to work with the foreclosures to help the previous owners get back on their feet. With borrowed money, the nonprofit buys homes after foreclosure and sells or rents them to their previous owners, writing new mortgages and offering credit counseling to the homeowners.

Banks are also pressured to sell the foreclosed properties by City Life/Vida Urbana, a housing advocacy group, which performs demonstrations or holds blockades outside the foreclosed properties while demanding lenders to sell them at market value. Students of the Harvard Legal Aid Bureau also pressure lenders to sell the properties rather than evict the residents.

Not only do evictions hurt the residents, but the newly empty properties often attract crime and weaken the value of all homes in the neighborhood. For example, the neighborhood of Dorchester has twice the state average of foreclosures and delinquencies. Between 2005 and 2007 housing prices fell 40 percent, compared to 20 percent statewide. Reducing evictions help the entire community.

This counterintuitive solution has so far been a big success. During this housing crisis it’s very encouraging to see such innovative responses to foreclosures, and of course it is always great when struggling homeowners get a second chance. Perhaps we can implement a similar practice here in Florida, where foreclosures continue to remain high.

Loans are a very large business these days, from the popular cash advance or payday loan to credit cards or unsecured personal loans. However, borrowers are starting to feel the weight of these loans as the high interest rates and heavy fees add up.

Today, many more people need personal loans that have lost their homes to foreclosure. This is especially the case in Florida, where foreclosures continue to soar into 2010. Because many homeowners don’t have a home with enough equity to get a home equity loan, peer-to-peer loans seem to be a viable option.

Peer-to-peer lending has grown exponentially. According to a report in a Wall Street Journal site, in 2005 there were $118 million of outstanding peer-to-peer loans. In 2006, there were $269 million, and in 2007 there were $647 million. The projected amount for 2010 is $5.8 billion.

This extreme growth gained the attention of the Federal Reserve Bank of San Francisco. In 2008 community leaders, investors and the largest peer-to-peer lending program in the world at the time came together for a meeting to discuss the consequences that the new lending practices will have. They concluded that peer-to-peer lenders are an emerging technology and provide an important service to the community.

While this lending practice is embraced by the Federal Reserve Bank of San Francisco and many borrowers, the United States Securities & Exchange Commission finds problems in it. To regulate the growing industry, the SEC says all peer-to-peer lending services need to be properly registered as to not violate the Securities Act and to provide credibility.

Despite a slight controversy, peer-to-peer lending is going to continue to grow in popularity. With the interest rates and fees that come with traditional lending outlets, it’s no surprise that borrowers are finding alternative means more attractive.

Foreclosure filings were reported on 349,519 properties in December, which were also 15% higher than in December 2008, said RealtyTrac. Filings were reported on 2.8 million properties total in 2009, a 21% increase in total properties from 2008 and up 120% from 2007, according to RealtyTrac.”It’s somewhat startling to see these kind of numbers,” says Brian Bethune at IHS Global Insight.

After peaking at over 361,000 homes in July, foreclosure filings had been falling because of trial loan modifications, state legislation extending the foreclosure process, and a large volume of homes in the foreclosure pipeline, said James Saccacio, CEO of RealtyTrac.

With the goal in mind to prevent foreclosures by providing homeowners with more-affordable mortgages, the Obama administration is attempting to get banks to rework strapped borrowers’ home loans into lower monthly payments. Despite this attempt, approximately 2.4 million homes are predicted to be lost through foreclosure, auction, and other means in 2010, according to Moody’s Economy website.

As of early December, over 700,000 homeowners had received trial modifications. “The foreclosure crisis continues on. I don’t see any stabilization,” said Mark Zandi of Moody’s Economy. Zandi believes the foreclosure crisis is in full swing, and mortgage modification efforts aren’t working adequately. The crisis will continue to lead to falling home prices in spring and summer, he said.

Foreclosure filings could lessen as more banks agree to short sales, which the Obama administration is attempting to encourage. Short sales allow delinquent homeowners to sell homes for less than the balance of their mortgage. Zandi predicts short sales will increase as lenders become more comfortable with it, and it costs them less than a foreclosure.

In one year,10 of Jacksonville’s new car dealerships went under, leaving only 45 new car dealerships that are members of the Jacksonville Automobile Dealers Association.

When Chrysler and General Motors went bankrupt, they were forced to reduce their dealer networks. The dealerships that had sold a majority of their products were affected most, while dealerships that sold other vehicles, such as Ford, Toyota and Honda, were not affected by the bankruptcies. Unfortunately however, no dealership was protected from the downturn in business related to the economic recession last year.

Tom O’Steen, who was president of the Jacksonville Automobile Dealers Association as Chrysler and General Motors each closed two Jacksonville dealerships, estimated that Jacksonville new car dealerships employ approximately 50 people per dealership. “It certainly impacts several hundred individuals, as you can imagine,” said O’Steen. “These are good-paying jobs.”

According to O’Steen, when dealerships typically close, it could be in result of market forces or dealer network decisions. However, when such a move comes from an automotive manufacturer, it seems less logical. O’Steen believes dealers are more victims than anything in these situations. “It is very unfortunate, and I do not agree that those dealers should have lost their franchises,” he said.

Two Jacksonville Kia dealerships also went under in 2009. However these losses were not due to financial problems on the part of the manufacturer, but to financial difficulties involving bank funding.

Nathan Potratz, the new JADA president for 2010, said he hopes he’ll preside over a better year for selling new cars in Jacksonville. Potratz anticipates 2010 will be a better year than the last, and from the overall feeling he’s receiving from the public there is more optimism in the air as well. “A lot of people put off decisions last year. A lot of people are moving toward more normal, but more conservative, spending habits.”

The customers of these banks need not worry as the Federal Deposit Insurance Corporation, which has insured bank deposits since the Great Depression, currently covers accounts up to $250,000. Friday’s closures will cost the FDIC approximately $93.1 million.

Premier American Bank, National Association in Miami, a newly chartered institution and subsidiary of Bond Street Holding in Naples, Florida, will take on the failed bank’s $326.3 million in deposits and will acquire essentially all of Premier American Bank’s $350.9 million in assets, according to the FDIC. Premier American Bank, National Association entered into a share-loss agreement with the FDIC on $300 million of failed bank’s assets. The four branches of Premier American will reopen on Monday, now as branches of Premier American Bank, National Association.

Sunflower Bank, National Association in Salina, Kansas will take on Bank of Leeton’s $20.4 million in deposits. The FDIC said it will keep hold up most of the failed bank’s $20.1 million in assets for later disposition. The one branch of Bank of Leeton will reopen Saturday, now as a branch of Sunflower Bank, National Association.

Customers of the failed banks can access their money over their weekend by writing checks or using their ATM or debit cards. Checks will still be processed, and borrowers should continue to make mortgage and loan payments as usual. The FDIC also stated that customers should keep using their existing branch until they are given notice that the takeover has been finalized.

A total of 140 banks failed in 2009, marking the highest number of closures since 1992, when 181 banks failed. 1989 holds the record high with 534 banks failing, occurring during the savings and loan crisis.

A recent article in the Orlando Sentinel focused on the Orlando Division of the US Bankruptcy Court’s Middle District of Florida and its determination that brochures for free or reduced cost mental health services should be readily available. According to the article, Bankruptcy filers in the Orlando court will be able to read through fliers that promote the United Way’s 211 line that offers twenty-four hour crisis and suicide counseling, as well as other services including help with food, shelter, clothing, and family assistance. US Bankruptcy Judge Arthur Briskman initiated the effort, citing that “The awareness and availability of professional counseling is beneficial with the significant increase of economic pressures on our fellow citizens.” His effort includes displaying brochures at the courthouse, as well as creating an information portal regarding counseling and services on the Court’s website.

The availability of mental health services for those in need is especially pertinent in the Middle District region, which spans from Fort Meyers to Jacksonville, due to the record amount of bankruptcies and foreclosure in this region. For example, from 2008 to 2009, bankruptcy filings in Orlando have increased fifty-nine percent, with a forty-two percent increase in Tampa, and thirty-two percent increase in Jacksonville. The housing market has been hit quite hard in Florida, and coupled with the staggering unemployment numbers, many people feel lost as to what they can do next.

Although filing for bankruptcy can provide some monetary relief, there are still emotional and mental needs that must be met. Hopefully, these fliers and additional information will encourage people to get the help they need and deserve in the wake of bankruptcy or foreclosure. These services are important to promote and should be made available to bankruptcy filers in all courthouses. If you are one of the many who are having trouble coping with the economic downturn, or if you have filed for bankruptcy and it has taken its emotional toll, please seek the free help that is available through the United Way or another mental health counselor.