Programmes are taking shape so that a lifeline can be thrown at foreclosure victims. It is now a month since the $700 billion bail out plan has been passed. The Bush administration is trying to find ways of how to directly come to the help of consumers that are cash strapped and facing foreclosure threat.
In Illinois the end of the third quarter saw a foreclosure rate of 1:500 according to RealtyTrac. It is about double the number of the previous year during the same quarter. The situation here is miming the national scene. There is widespread anxiety because the problem is spilling over from the courtyard of the two prime players, the lenders and borrowers to affect governments and communities.
The mortgage structure is so fragile that it depends on the voluntary participation of lenders to make any move feasible. Then there are many instances of many who just cannot run the mortgages even after modification.
Those who are experts in the housing say that for the national programme to be something more than window dressing the benefits must be something bigger than just a trickle down effect to the grass root level of the consumers.
Christen Wiggins of Neighborhood Housing Services says that the positive side about all these measures is that it is inculcating the people with hope. She said, “Whether or not the bailouts and rescue packages are designed to get to the homeowners, that’s the question. I think they want to make this work.”
Since the last two weeks the FDIC, the Treasury Department and the White House have been huddling over various plans but as yet they have not said anything publicly. FDIC has come forward with a proposal that would help 300 million house owners at threat from foreclosures. The government would be offering guarantees to the lenders so that they do no hesitate to go ahead with modification plans. But so far no plan has been announced. Jennifer Zuccarelli speaking on behalf of the Treasury said, “It’s not like there’s just one plan out there, and we’re all trying to make that one plan work. We’re looking at a number of things.
Differences are arising over the eligibility factor and the fairness meted out to those who are as yet regular in their mortgage payments. It is much more complicated than what apparently appears to those not directly involved with these foreclosure rescue plans.
Bank Foreclosures by Top States
McClamy is one of the many. He has a family of ten including grandchildren and is bewildered in a cruel world. Running from pillar to post he is finding it difficult to get his house loan modified so that he can continue to stay in the house that has been his home for many years.
When his ARM was about to jump form $1,200 per month to $4,100 he contacted his lender – Countrywide. The latter replied that help could not be given because he had not fallen behind in payments as yet. Strangely at one point, seven months ago, he had actually fallen behind and yet the staffs of Countrywide made him run from one table to another without result. When contacted regarding this particular case, Countrywide was non-committal.
Some of the counseling agencies working with house owners under threat from foreclosures (42 groups) made a survey. According to their findings, lenders are not consistent in modifying loans that will benefit the borrower for a long term by changing interest rates and time span. The actual number of changes effected by the lenders is dismal and the same as what it was a couple of months previously. Foreclosures were common for about 68.4% of those surveyed. The important point is write-downs – but these are not happening. Many of the borrowers find that their property is worth less than the loan amount. This makes refinancing impossible. In these cases it is a must for lenders to slash the principal amount. Only 30% of the respondents said that the lenders are seriously doing anything to help borrowers faced with impossible rate increases.
The pivotal point is that these loans should not have been contracted in the first place. Most of the agencies reported that majority of their clients had been burdened with loans that were unaffordable at the time they inked the papers. The mortgage industry targeted immigrants in fraud deals. About 60% of those surveyed were not conversant with English. The loans were sold in native tongues but the formal papers were all in English.
The worst victims of the foreclosure victims are the renters who pay their rents regularly only to find out that the house has been foreclosed and they have to vacate the premises. They hang in midair!
In California doubts are being cast about the sincerity of lenders in helping the foreclosure victims. However the office of Governor Schwarzenegger released reports about the lenders rewriting the loans of the troubled borrowers. A governmental tally shows that loan modifications by which loans were either frozen or interest rates decreased numbered 8,686 in May 2008. This was less than the April number of 9,448. Compared to January however the numbers in May showed an increase.
Lenders said that all total the loan deals worked out showed increases. There were 21,359 workouts in May as compared to 20,567 in April. In January the number of workouts was 16,000. These deals covered a wide range of alternatives including short sales. By it the lender permits the sale of a house at a price less than the loan amount and both sides benefit by avoiding foreclosures. In loan modification the borrower gets time to catch up with the previous arrangement or the rate of interest is lowered.
The authorities agree that the initial pace of help was slow in November last year. But the results have encouraged speeding up of the process. Mark Leyes of the Department of Corporation is enthusiastic about these “dramatic increases” and “good news.”
The state government launched an advertisement campaign for foreclosure victims. There were billboards on buses and in newspapers flashing the message “90 Days of Hope”. The borrowers were advised strongly to call the lenders for help. The idea is that if this $1.2 million programmed helped at least one out of 20 families calling it was worth it. Amanda Fulkerson, spokesperson of State and Consumer Services Agency was quite upbeat about it.
The state Senate mulled over a bill by voting of 32/2 that would require lenders to contact the borrowers in person or via telephone to find out a solution before starting off foreclosures.
Another bill (1137) sees to the interest of tenants. They will be given 60 days time to make arrangements for shifting after the unit is foreclosed.
Those who become owners of foreclosed houses will be expected to see to its maintenance. If not they were be penalized to the tune of $1,000 per day. As soon as the governor signs the bill the changes will come into effect.
All these are against an alarming background of increasing foreclosures with California continuing to rank among the top offenders.
Bank Foreclosures by Top States
Governor Mike Easley has initiated plans persuading lawmakers of the state to compensate for the inaction of the federal government by coming forward with a measure that will help North Carolina foreclosure victims. More relaxation will be allowed for them to repay mortgage debts. Easley bluntly stated that they had all been expecting the federal government to come forward and be effective in their measures but so far ‘they’ve done nothing’. Hence the state decided to take steps – if nothing else it will help the foreclosure victims of North Carolina.
As per its proposal the lenders will be expected to give the sub-prime mortgage borrowers a minimum of 45 days notice before starting off on the foreclosure process. It is mostly those with poor credit history that have been peddled these sub-prime mortgages. This time will help many in working out a solution to save the houses that are their homes. Dan Blue (Democrat) is one of the main sponsors of the bill. The point is to step in before the foreclosure process kicks off because once it starts rolling more or less all hope is gone; the house is lost.
The lenders would also have to let the state know the details of delinquent borrowers. It will allow the banking commissioner of the state to work with the borrowers as well as the lenders to sincerely chalk out a plan action that will ultimately check foreclosures.
By the bill the banking commissioner will have the authority to further extend the foreclosure by another month for those house owners, who has been able to convince the state that they have the capacity to meet their commitments.
Easley hopes that the plan will help nearly 25,000 borrowers who have reached a dead end trying to grapple with the foreclosure problem. However he stresses that this not a bail out plan – the state is not taking the responsibility of paying off the loans of others or subsidizing the banks.
In 2007 North Carolina witnessed 50,000 foreclosures that calculated to a 9% increase from 2006 according to government records. In 2007 the legislators came down sharply on lending standards. It was specially so in the case of sub-prime loans that has been liberally granted without checking on the capacity of the borrowers to repay it. From henceforth new applicants will be rigorously scrutinized. However this will not help those already gasping in the foreclosure net.
As foreclosures cross record marks across the country, Indiana ranks third in the race. Alarmed the state has come forward with a helping hand to stem the tide. Winter is nigh and holiday bells are ringing – hardly the setting for home lovers to be thrown out of their houses by the curse of foreclosures. The Indiana Housing Community Development Authority spokesperson Sherry Seiwert sighs that foreclosures are never welcome but the timing for this phenomenal increase could not be worse during this season for celebrations.
Indiana Foreclosure Prevention Network is a new operation launched by the state aiming to quickly turn the course of foreclosures. Lt. Governor Becky Skillman opines that it is a fact that the advice of a trusted counselor goes a long way to tackle the problem. These genuine friends are not far away – just a phone call or a mouse click distant. It is just that the traumatized victims are unaware of it. There is a toll free hot line, which is confidential and open round the week for 12 hours each day. Questions are asked over the phone. They will guide the caller to the nearest qualified capable counselor. The important factor is time. Longer the delay – less the number of alternatives. Usually borrowers for obvious reasons are reluctant to directly contact the lenders. A free proactive counselor will make a great difference.
The website too enables confidential contact. Questions and answers are thrown back and forth online. The counselor is most probably just a stone’s throw away from aggrieved person. The scheme seems to working as already hundreds of calls are pouring in. Soon billboards and radio announcements will reach out to more sufferers. The programme is ambitious about making its presence felt.
Foreclosures are the inevitable fallouts from the sub-prime mortgage scheme gone awry. The accusing finger is pointing to predatory lenders who lured in unwary borrowers with teaser rates and high promises. But when the honeymoon period expired and interest rates began to rise one by one millions of houses began to foreclose right across the country. The crisis is now affecting not only the hapless borrowers but also the lenders, banks and mortgage giants. The socio-economic scene has become grim and the government has no alternative but to make noises. Unfortunately nothing can be legally done for those already boiling in the cauldron. Here lies the crux of the problem.
Via
