Progress Noted in New Foreclosure Prevention Plans
Finally progress has been noted in the new foreclosure prevention plans. HUD officials noted that lenders had extended loan modification offers to 40,000 borrowers who had been battling high mortgage instalments till the second week of June 2009. It is three times the number of average mortgage settlements that servicers had hitherto tackled.
Shawn Donovan the head of HUD said, “Foreclosures were becoming a self-reinforcing problem for the housing market. Already we are seeing signs that the housing market is better off than when President Obama took office.” He was speaking at a conference organized by National Association of Real Estate.
The financial crisis has been beset by many problems but of all these, the toughest to tackle has been the issue of increasing number of foreclosures that defied all palliative measures. The Hope for Homeowners plan that had been launched with great hype by the Bush administration failed to take off. Only 51 borrowers could change to cheaper costing loans. Another scheme Hope Now Alliance that had leaned heavily on the voluntary efforts of the lenders could reach out to 4 million householders. But it has been calculated that less than a quarter of these finally did get affordable loans. The irony was that many of these borrowers saw their monthly payments increase after negotiation! The lenders shrewdly tagged on unpaid dues to the principal amount instead of forgiving it.
In March 2009 the Obama government set off the programme known as Making Home Affordable. This plan had a totally different approach with incentives being offered to the lenders, servicers as well as the borrowers to modify or refinance the loans. The carrots offered depended on the success of their endeavours. The longer a borrower remained current in payments the servicer would get more. The government also promised $10 billion to compensate for the losses that banks as well as the investors suffered because of these workouts.
Initially the plan was a slow starter and it seemed that its fate would be no different from that of the others. But during the past couple of weeks the efforts of the Obama government seems to drawing to it more lenders who are willing to come to new terms.
Critics however say that considering the enormity of the problem the plan does not even scratch the surface. Much more is required. Right now there are 40,000 modifications each week. Even if this pace is maintained the plan will reach only 2 million in 2010. But the country is plagued with 6 million foreclosure victims
- Tendency to Walk Away from Underwater Mortgages Facing Foreclosure has Increased
- Life Goes Flowing On Even After Foreclosure
- There is a Huge Shortage of Lawyers Trained in Foreclosure Complexities
- The Foreclosure Crisis Means a Bonanza for Some Enterprising Entrepreneurs
- The Restoration of the Jacksonville is Aided by the Prices of the Foreclosure Listings
- Foreclosure Climate has Caused Sharp Rise in Homeless Persons
One Response
Mortgage loan modification can help homeowners to save their property, but we still have a long way to go. Nobody really knows the end of this tunnel, but the only thing we can do is to hope for the best.