Federal Government Continue Its Efforts to Prevent Home Foreclosures

by Simon Lindsay on Foreclosure Help, Stop Foreclosures

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.