Borrowers Facing Foreclosure Risk are Searching for Mortgage Relief
Yomalis Hilario and Johnny Montero are two of the many borrowers at risk from foreclosure searching for mortgage relief. They bought a house in Paramus in 2006 for $468,000. But soon they found it difficult to continue paying $3,700 per month on two mortgages carrying heavy interest.
Hilario contacted the servicer asking for a more reasonable rate and they brought it down from 8.25% to 7.125% on one mortgage. The second mortgage was brought down from 12% to 7%. But since they lost their jobs the couple failed to manage even these reduced payments. Consequently the house was foreclosed and sold in an auction.
The incident shows that in the present scenario loan modification is not the answer to the current phase of the problem. The Obama government has been laying stress on loan modification but the critics contend that the method is too long drawn and complicated to be effective. In many cases the modification does not work because the borrowers are overburdened with debts and their incomes are disproportionately low.
It is now clear that more borrowers are failing to manage even modified loans. The figures of the second quarter this year are alarming according to Mortgage Bankers Association with one out of eight borrowers in some stage of foreclosure.
The rescue measures started by the Obama government focused mainly on those borrowers who had contracted wrong type of loans but today the problem is that of unemployment. During the boom period the owners borrowed being confident that the value of property could never fall. The money from these loans they used for other purposes. No down payments were made and when the rates began to set all hell broke loose. The borrowers could now not even manage to sell their homes and be free because the worth of the house became lower than the loan amount. The lenders are greatly to blame for this situation and the regulators for allowing it to happen.
Recently there is a growing group of failing borrowers who have lost their jobs – this being the prime reason for their failure. Pundits now opine that unemployment is the prime and bigger cause for triggering the second wave of foreclosures. Even with changes in the mortgage amount the borrowers are failing to keep current.
The legal representative of Hilario and Montero argues that that the homeowners should first check if the mortgages transgress the Truth in Lending Act. If so then the loans would become null and void.
Related Posts
- The Home Affordability Programme to Help Foreclosure Victims
- Modifications are Making it More Difficult and Pushing Borrowers into Foreclosures Again
- Indirect Steps Taken by White House May Stem Foreclosures
- Increase of Foreclosures in Chicago
- Nearly Half Of The Modified Loans Have Again Started To Default
