Lenders Await Obama’s Foreclosure Prevention Program

by Donald Hanz on Stop Foreclosures

President Barack Obama, who is currently on a road trip to gather support for his economic recovery plan, is expected to disclose details of his foreclosure prevention plan in Arizona, one of the states that suffered greatly from the housing crisis.

Details of the foreclosure program are still being formulated, but the administration is considering providing help to distressed homeowners who are on the danger of being delinquent. Current programs to reduce the number of foreclosed homes are designed to help delinquent homeowners.

Meanwhile, mortgage lenders had put a moratorium on foreclosures while they wait for details of Obama’s recovery plan.

During a Congressional hearing, banks have agreed to temporarily stopped foreclosures until such time that the Obama Administration has unveiled a program to prevent the increase in the number of distressed properties.

Bank of America disclosed that its moratorium applies to all mortgage loans it owns and services and those handled by Countrywide Financial Corp., which the bank acquired in July 2008.

On the other hand, Citigroup announced that its moratorium will end on March 12, 2009 or until such time that a program for loan modification has been finalized, whichever comes first. The moratorium applies to all mortgages that the bank owns.

Government-sponsored enterprises, Federal Home Loan Mortgage Corp. and Federal National Mortgage Association have also suspended foreclosures until early March 2009.

Morgan Stanley’s moratorium runs until March 6, 2009 and covers its Saxon unit which is in charge of loan payment collection.

On its part, Wells Fargo expanded the timeline for the moratorium for its mortgage portfolio, Pick-a-Payment which it inherited from Wachovia. Also, it stopped repossessing other mortgage loans it owned and serviced until the Obama Administration announces its foreclosure prevention plan.

JPMorgan believes that the deadline for its moratorium program, which is March 6, 2009, is enough to provide the Treasury the needed time to announce its final loan modification plan.

Meanwhile, a report by Credit Suisse showed that foreclosures have increased during the mortgage loan crisis. The report stated that 8.1 million houses, representing 16 percent of the total number of homeowners with mortgages, are in danger of losing their properties by 2012.

The National Association of Realtors said that sales of abandoned and vacant properties contributed to the drastic drop of existing homes’ median price, which reached its lowest price since 2003.

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