Problem of Foreclosure Listings Needs Aggressive Solution

by on Foreclosure Crisis

In February, almost 3,000 homes in Maryland received foreclosure filings, bringing total Maryland foreclosures to 12,977 housing units. In the city of Baltimore, neighborhood revitalization efforts in the past several years are being destroyed by the rising number of abandoned foreclosed properties being added to foreclosure listings.

Nationwide, as large numbers of people lose their jobs, large numbers of homes are also added to foreclosure listings.

The loan modification and loan refinancing schemes of President Obama’s foreclosure prevention program have been launched in March, but many mortgage lenders have not yet implemented the program. Many banks have not yet integrated Obama’s Making Homes Affordable schemes into their computer systems and have not yet trained their staff to respond to requests for loan modifications.

As foreclosure listings advertise bargain-priced homes and as neighborhood suffer from abandoned bank foreclosed houses, hopes of recovery seem bleak.

Some analysts are now proposing more aggressive actions by the federal government to force lenders to undertake loan modifications. They are even proposing the creation of a federal agency patterned after the Home Owners’ Loan Corp., which was created to respond to mortgage debt problems during the Great Depression.

Banks which have been keeping many forclosure houses from foreclosure listings in the hope that home prices recover are now realizing that they are instead losing more. Many of the foreclosed houses are being vandalized, further reducing their values. Aside from the foreclosure costs and legal fees they pay, banks also spend some more money to maintain foreclosed properties, forcing banks to rethink their strategies regarding foreclosure properties.

Federal officials need to look at the apparent success of the Federal Deposit Insurance Corp.’s experimental loan purchase program. Recently, the FDIC helped an alliance of investors acquire over $560 million mostly delinquent home loans at a big discount and then resell them to the homeowners at bargain prices to prevent their houses from being added to foreclosure listings and to enable them to keep their homes.

But politicians are not so enthusiastic about supporting proposals to force banks to sell their foreclosed properties at a discount for subsequent resale to distressed homeowners at bargain prices. Many Americans are questioning the idea of spending taxes paid by responsible Americans to cover the financial recklessness of irresponsible Americans.

In a recent nationwide survey, only 46 Americans in every 100 support the use of taxpayer money to save Americans from losing their homes to foreclosure listings.

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