Mortgage Lending Industry Urged to Delay Foreclosure

by Simon Lindsay on Mortgage

With the new housing legislation expected to provide relief for many troubled homeowners, it is not surprising that lawmakers are urging mortgage lenders to delay foreclosure filings until after the new law has taken effect on October 1.

A public hearing is being scheduled on September 17 in order to measure whether or not mortgage lenders accommodated their request to hold off foreclosure. Members of the House Representative’s Financial Services Committee are hoping that forbearance demonstrated by the mortgage lending industry will give distressed borrowers more hope and somehow slow down the rising tide of foreclosures.

In addition, mortgage lenders are being called upon to review their delinquent borrowers’ loan documents as early as now and determine if any of them are qualified for the refinancing program, which is a part of the foreclosure rescue legislation. If they think that the homeowner is eligible, then lenders should really make an effort to hold off foreclosure and initiate communication with the borrower.

On the other hand, homeowners struggling with their mortgage payments should also try to contact their lenders and find out if they too, will be qualified. Among the requirements is lender’s approval to refinance the existing mortgage into a government-backed loan. The refinanced loan feature 30-year fixed interest rates, which makes paying them more manageable compared to the other exotic mortgages.

The new housing legislation is actually a first of its kind and targets about 500,000 troubled homeowners. Many state governments have even signed several forbearance legislations into law, hoping that they could further give these distressed borrowers more time to work out their mortgage problems with their lenders and comply with the requirements of the new mortgage relief program.

With everyone pitching it, the entire nation is fervently hoping that the foreclosure crisis will finally be addressed satisfactorily.