U.S Government Attempts to Lower Number of Bank Owned Foreclosures

by Donald Hanz on Foreclosure Help

In an effort to minimize bank owned foreclosures, the U.S. administration has launched an effort designed to compensate home owners who opt to sell their houses at a cheaper price. The Obama Administration has reserved $75 billion to help home owners who are facing foreclosure sell their properties faster.

According to government officials, the effort aims to optimize the short sales process to help both creditors and debtors. The program plans on compensating every party involved in the short sale, including bank creditors and home owners.

The program is expected to benefit banks in a way that they will get more money should homeowners sell before they are foreclosed. The effort is also expected to benefit communities around the U.S. as short sales will provide more cheap homes to those seeking to purchase residential real estate and will help keep neighborhoods safer as vacant structures due to foreclosure contribute to increased number of crimes.

Proponents of the program have asserted that bank owned foreclosures can hinder the nation’s economic recovery, hence the need to aid those homeowners who were not able to pay their mortgage and are facing foreclosure risks.

Meanwhile, banks are reacting cautiously to the news and have stated that the program should not be used by borrowers to escape liability. Financial institutions have further added that borrowers should exert every effort to pay their mortgage and should sell their houses only as a last option.

Aside from allowing debtors and creditors to recover more from short sales and providing more opportunities for buying foreclosures for sale, the government effort is also expected to create a future scenario where banks are unable to just foreclose on debtors who are unable to pay for their loans and will instead have to reschedule the borrower’s debt.

This future scenario can happen if a proposed regulation governing individual bankruptcy will get through the Chamber of Deputies. The proposal has already been approved by the U.S. Senate.

The project designed to minimize the number of bank owned foreclosures in the country have been touted by legislators as an effort to help Americans facing financial difficulties. Banks however, are allegedly not very enthusiastic about the project.