Archive for the 'Stop Foreclosures' Category

With the continuous flooding of foreclosures in the housing market, the need for government assistance is undeniable.

One proof of the government’s action is the new proposal of the Federal Reserve to the banking committees in Congress, which is a step-up effort for home foreclosure prevention. This plan is actually a requirement by the Emergency Economic Stimulus Act (ESSA).

The policy’s main goal is to prevent residential mortgage assets that are owned, held, or controlled by Federal Reserve Bank from being foreclosed, which can be resolved by loan modifications and other actions in line with the Federal Reserve’s duty to maximize assistance for distressed homeowners and encourage mortgage servicers to lower mortgage loan value. It is also extended to help facilitate JP Morgan Chase and to support AIG, an insurance giant.

While Congress is reviewing the said foreclosure prevention program, a foreclosure relief bill on the other hand is moved closer to the House.

The said bill aims to prevent home foreclosure by allowing bankruptcy judges to do some alterations of mortgage terms; lenders however are not able to stop this bill.

The vote of the House Judiciary Committee have moved the bill to the full House and its Committee Chairman John Coyers have done some amendments of the original bill so it would only affect those mortgages already existing before the bills turn into law.

Also, the said amendment would address lenders’ complaints regarding the mortgage terms alterations; and this risk is to be eliminated for new borrowing.

However, this bill has been opposed by Republicans who believe it would just increase lending costs and make borrowers file for bankruptcy and flood the courts.

But still, this bill is defended for it would limit the fallout brought about by the real estate depression.

If foreclosure prevention laws and programs are effectively enforced by the federal government, then homeowners would not lose their foreclosed homes and the housing industry could eventually recover.

Congress has been readying two foreclosure prevention bills to be presented to Barack Obama during his first working days as president in January.

One of the bills would allocate at least $40 billion from the second half of the $370 billion Troubled Asset Relief Program fund to directly help homeowners in danger of foreclosure. The other bill would authorize bankruptcy judges to order loan modifications for the primary mortgages of homeowners in bankruptcy.

Many of the country’s economists say that continued foreclosures would perpetuate the cycle of bank losses, housing market decline, business losses, unemployment and foreclosure. According to Moody’s economists, over seven million homeowners would default on their mortgage loans by 2010 if nothing is done to help troubled homeowners. As of the first week of January, about 2.5 million mortgage borrowers are already in foreclosure and nearly ten percent of all Americans with home loans are delayed in their monthly payments.

The modification plan being readied by Congress is based on the model used by Federal Deposit Insurance Corp. Chairwoman Sheila Bair to help IndyMac Federal Bank borrowers. Under the plan, monthly payments would be lowered to about one-third of a borrower’s gross monthly earnings. Mortgage lenders would be advised to extend loan terms to up to forty years and to reduce interest rates temporarily to as low as three percent for five years.

Congress has chosen the FDIC model because none of the 7,500 IndyMac mortgage borrowers who availed of Bair’s loan modification plan have gone back into default or become in danger of foreclosure.

The other congressional bill, which empowers bankruptcy judges to rewrite mortgage loans, has been opposed by bankers because it would force them to impose higher interest rates. But it has received support from Citigroup, which holds seven percent of the country’s mortgage loans.

These two bills, if fully supported by Democrats and approved by Congress, could help Obama fulfill his campaign promise of prioritizing the rescue of homeowners troubled by foreclosure.

At least two groups are presently pushing for new foreclosure prevention plans when Barrack Obama steps into office.

The National Association of Home Realtors organized 80 builders, mostly from small private companies, to meet with lawmakers involved in committees in charge of the president-elect’s economic rescue plan. The bailout program is estimated to cost nearly $800 billion in two years.

The builders are pushing for massive government intervention to increase home sales and prevent future foreclosures. Their proposal includes a package of subsidies to adjust mortgage rate to below 3 percent for the first half of 2009, and a tax credit reaching $22,000 for buying homes.

Meanwhile, the National Association of Realtors had its members send over 300,000 letters to lawmakers. The realtors are rallying for a more modest proposal which aims to provide a tax credit of $7,500 for home purchases.

However, housing aid is expected to be part of a separate bill and not Obama’s economic stimulus package. The bill is expected to outline a new plan for the remaining $350 billion economic bailout money during the Bush administration.

Obama in an interview with CNBC said that foreclosure prevention would be the best solution for declining home values. He also said that a new foreclosure plan is in the works and is going to be unveiled within the next two months. The plan is expected to be modeled after Federal Deposit Insurance Corporation Chairman Sheila Bair’s program which gives lenders monetary incentives to modify loans. The FDIC plan is estimated to prevent 1.5 million foreclosures.

Last September, one in 10 US homeowners were in stages of foreclosure or were at least a month behind on their mortgage payments. Over 8 million foreclosures more are predicted to take place in the next four years.

Government anti-foreclosure plans have been criticized by various sectors. A particularly contented issue by lenders was the Democrat-led initiative to allow bankruptcy judges to modify loans or interest rates of primary home loans.

Governor Arnold Schwarzenegger was venerated by the lot when he was on with the Assembly Democrats in the pursuit in cutting down foreclosure by going against mortgage related bills in the Legislative regular session. But this did not actually alarm the legislators, not because the problem is not urgent but because the problem is not [...]

Many experts believe that the key to solving the deepening economic problem is to stabilize the housing market and finally put an end to increasing foreclosures.
The statement is easier said than done. Whittemore School of Business and Economics Professor Rose Gittell says that the housing crisis has created a vicious cycle that [...]

Two members of congress vowed to continue pushing for legislation allowing bankruptcy judges to alter mortgages for homeowners facing foreclosure even as lenders voiced strong opposition against the plan.

Two major political parties in the administration pointed out that there are a lot of foreclosure complaints during the previous administration.

Foreclosures are the last thing homeowners want to hear. But if time comes it is already right at your doorstep, a short sale might just save you.

Reverse mortgages are becoming popular among older people as a tool to help them avoid foreclosures. Here are some basic information about reverse mortgages to guide older people in making an informed decision:

With the rising number of foreclosures hitting the American economy, a nationwide program is underway in an effort to assist these troubled homeowners. However, the plan has received criticisms from various sectors, questioning the need to support these delinquent homeowners while the majority of American families are keeping current with their mortgages.