Bank Foreclosures Sale Articles

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.

Efforts to add a stipulation in the economic stimulus bill supported by congressional Democrats that would permit bankruptcy judges to minimize mortgages as a possible solution to the foreclosure problem is being resisted by President-elect Obama and his advisers.

It was made apparent to lawmakers by Obama’s economics adviser Jason Furman that Obama believes the alleged “cramdown” stipulation would sacrifice GOP votes and jeopardize bipartisan support in the Senate.

On the other hand, key supporters of the cramdown stipulation believe the issue has to be dealt with the soonest. Although risky, it may even be worth sacrificing some Republican cooperation to aid homeowners in the foreclosure problem.

With the bankruptcy provision, homeowners nearing foreclosure who owe more than what the value of their house is can seek assistance and can report for bankruptcy. A bankruptcy judge can lessen the home loan into the original worth of the home.

Democrats have urged for the change in the law as a means of aiding homeowners trapped in the foreclosure problem, compelling lenders to adjust more home loans rather than letting a bankruptcy judge reduce payments more harshly. However, lenders argued that the law would initiate a rise in mortgage rates due to an increase in loan charges that might be soon revised by a judge.

Lenders such as Citigroup and Durbin gave their approval to the change in law for as long as it is restricted to loans prior to endorsing the bill. According to Matt Gleischman, Durbin’s spokesman, there are high expectations of the bill to be passed in both the House and Senate.

A possibility could be including the cramdowns into an “omnibus” spending proposition to complete the appropriations work left unresolved by Congress last year. The House is expected to review the bill as soon as it passes the stimulus to the Senate. Cramdowns can also be set in legislation revising terms of the $700 billion bailout ratified in the fall. Still, there are some who are not confident that the bill will be passed in the Senate.

None the less, many people are giving up their homes because of foreclosure each day. It is important that the provision will be approved as soon as possible.

Preventing foreclosure may be one of President-elect Barack Obama’s top domestic priorities, but he also has other housing-related concerns on his agenda too. Alleviating homeowner’s taxes and acceding to the change of the mortgage-closing procedure are also in Obama’s to do list.

Avoiding Foreclosure

During his presidential campaign, Obama promises that his Treasury and Housing departments would be more assertive in adjusting the mortgage terms as the feds would collaborate with the states to organize extensive mortgage reform to combat the prevailing foreclosure problem.

Obama aims government and businesses to obtain broadly accepted rules in deciding who can avail of a loan modification and who cannot. That would mean a change from the current and time-consuming process of deciding on loan modifications on a case-to-case basis.

In addition, Obama wants lenders to delay the foreclosure proceedings until 90 days if the borrower is bargaining. He wants bankruptcy judges to make some changes in the mortgages of debtors in the repayment plans of Chapter 13 as well. Although lenders have opposed this move, they have no power to fight it since banks are receiving hundreds of billions of dollars in bailout money.

Tax Proposals

Obama intends to have a 10 percent tax credit on mortgage interest for non-itemizers since many homeowners do not get tax breaks for their interest payment on mortgage debt. The tax credit would be refundable as filers could acquire the money even though they do not owe any income tax.

Moreover, he suggests allocating $25 billion to the states so that they can provide money to local governments that raise property taxes in order to purchase important services like police, fire and schools.

Closing Cost Changes

Last November, the federal housing department made changes in the good faith estimate of closing costs (GFE) procedures. GFE is the document that records the estimated fees and taxes on a mortgage deal. Starting 2010, the GFE will be regulated into a three-page document, while estimated fees will have to be precise and brokers will have to reveal their compensation.

Even though challenges are in the way of getting government entities and private businesses to work together in the same direction, there is still optimism in the administration’s plans in foreclosure prevention, tax proposals and closing cost reform.

A year of extra attention and effort failed the Congress in resolving the foreclosure crisis.

A U.S. House bill that would authorize bankruptcy judges to modify mortgage terms is not a good solution to the foreclosure problem, according to Glenn Boyd, top securities strategist of New York City-based Barclays Capital.

Barack Obama, who is just a few days away from being inaugurated as the 44th and the first African-American U.S. president, is facing his first big test in the Senate. Democratic and Republican senators have been debating whether to give him the second $350 billion of the Troubled Asset Relief Program fund for his own foreclosure prevention program.

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

The Congress is left with merely less than two weeks to decide on whether the second half of the $700 billion bailout fund would be released or not. Supposedly, the fund is to be used to address the persisting foreclosure crisis in the country.

As President-elect Barack Obama waits for the response of Congress to his request for the release of the remaining $350 billion of the Troubled Asset Relief Program fund approved in 2008, he reaffirmed his election campaign promise of using a big portion of the fund to help homeowners avoid foreclosure and help small business owners save their operations.

Just minutes after President Bush said at a news conference that President-elect Barack Obama just had to “ask” if he needed the remaining $350 Billion bailout funds allocated for foreclosure prevention, Obama did just that. Now Congress has to vote within a 15-day period whether to approve the request.