New Anti-Foreclosure Help From Bush And Lenders

Posted in Foreclosure, February 15th, 2008 |

Six mortgage giants together with Bush administration announced on Tuesday fresh plans for giving relief to foreclosure victims. Treasury Secretary Henry Paulson said that the aim was to help as many as possible. He admitted that although some steps have been taken there is still much to be done – especially in the wake of thousands of mortgages about to be reset.
The new operation is named Project Lifeline is different from the previous one Hope Now. It targets those house owners who are 90 days behind in payment. It also covers all types of house loans – prime and Alt A, as well as 2nd lien mortgages and home equity loans. Hope Now concerned itself mainly with sub-prime borrowers who were current but would be at risk if their loans reset to unmanageable heights.

Floyd Robinson, an executive of Bank of America Consumer Real Estate, commented that loan modifications will be done wherever possible. Mortgage debts today are 20% higher than the value of the house. The bank would not totally negate the idea of loan write offs but it would not be general but on a case to case basis.

Paulson and Alphonso Jackson of HUD have been putting pressure on lenders and servicers to bring into line speedily their efforts to stop further rise of foreclosures. The housing market is beginning to correct itself through two ways – decline of house prices being offset by a growing economy. At a point water will find its level. Paulson reiterated the forecast of the administration that the although growth will be slow there will be no recession in the current year. The mortgage revision plans aims to pep up the economy.

The situation is so grave that politicians of all shades are beginning to sit up to the crisis and fish in troubled waters. Foreclosures have become a poll issue. Statistics is pouring in. It seems that those areas which saw the maximum housing activity like Florida and California is seeing today the maximum number of foreclosures. It is calculated that here there had been a lot of speculation. Today the investors are just walking off leaving the regions desolate with abandoned houses. There are many who bought houses for residential purposes and they are a troubled lot. Also badly affected are the tenants without rights, and dumb pets who have been left to die or fend for themselves.