Foreclosures: Task Force to Tackle the Foreclosure Menace

Lt. Governor John Carney is not content to sit and watch the foreclosure waves rising and drowning everything in its path. He is actively seeking $1 million to pep up foreclosure assistance programmes of Delaware. In the second quarter the number had risen to 2,500 as against the state’s annual standard of 2,000. Carney took up the challenge and quickly organized a foreclosure task force. The task force has been set up with 16 administrators, legal experts, real estate agents, bankers and others connected with the housing market. The work is to find out short as well as long term solutions to the foreclosure problem. The focus is also on making the public aware. Financial assistance will also be provided.

The group set up by Carney targeted short-term goals to raise funds for the troubled mortgage holders. The DEMAP or Delaware Mortgage Assistance Program helps those who qualify for it by meeting certain preconditions. They can get small amounts with a fixed rate of 3% - the amount not exceeding $15,000.

The task force is asking for an additional $720,000 to see it through the coming year – 2008. The state is without any foreclosure housing counselors. The private counselors are overburdened with work. The need of the hour is appointment of seven more counselors that will cost $232,000. An awareness campaign is imperative.

The sub-prime mortgages are held responsible for this foreclosure debacle. When a borrower fails to pay mortgage dues the property reverts to the lender. Before foreclosure steps are initiated the loan must be termed as delinquent – that is lagging behind 90 days. From 2006 – 2007 the number of delinquencies in Delaware jumped by 57%. With falling real estate market it becomes impossible for the borrower to sell off the property and clear the loan. But with foreclosure numbers reaching millions across the country the lenders too are badly affected and eager to come to an agreement. The government is facing a socio-economic problem with rise of criminal activity in deserted neighbourhoods.

The rates of the sub-prime mortgages, although initially low, are higher than the traditional prime loans. These are advanced to those who do not qualify for the conventional loans because of negative credit record and modest income. The fees charged by the mortgage company are also steep. They justify it by pointing to the risk factor involved.