Government Eyes Loan Modification Program to Curb Foreclosure

by Simon Lindsay on General

If everything goes as planned, the government will be able to provide genuine assistance to approximately 3 million distressed homeowners, allowing them to avoid foreclosure. The help comes in the form of a $50 billion plan that will be used to guarantee around $500 billion delinquent mortgages.

The said money will be coming from the $700 billion bailout program approved by Congress last October 1.

Basically, the government’s plan will include loan modifications, effectively lowering interest rates and making mortgage payments more affordable. Of all the efforts made by the government, this is perhaps the most aggressive.

Finally, the government is addressing the problems in the housing industry seriously for the first time. With the foreclosure crisis causing millions of homeowners to lose their homes to foreclosure and resulted to plummeting home prices, it is only right that the government recognizes the seriousness of the crisis.

According to the Mortgage Bankers Association, there are over 4 million homeowners who have missed at least a single mortgage payment and 500,000 of them are already in the initial stage of foreclosure.

Once up and running, the government’s program will be managed by the Federal Deposit Insurance Corp. To date, the said agency is working closely with the Treasury Department and is not giving out any other details until the plan is approved.

On the other hand, the Treasury Department revealed that the “loan modification” details are not that accurate and that the Bush administration is focused in finding other ways to curb foreclosure.

Many consumer and housing advocates have been vocal about their displeasure with the government’s way of handling the foreclosure crisis. Last Wednesday, approximately 100 protesters marched to Fannie Mae headquarters, holding signs which read “Restructure Our Loans Now” and “Foreclose on Fannie Mae”.

The said protest marched forced Fannie Mae officials to meet with the protesters and promise that they will always be willing to work with distressed homeowners to prevent foreclosure.