Religious Leaders Appealing To Feds to Help Contain Foreclosures

Posted in Foreclosure, November 21st, 2008 |

Religious leaders and community workers from Bay State are appealing to the federal government to help contain foreclosures. They will be speaking to officials of President-elect Obama’s transitional team, the treasury officials and some members of the Congress to ask for more aggressive modification of loans so as to stem the increasing pace of foreclosures.

The sub-prime mortgage is largely blamed for the setting in of the foreclosure crisis. Loans were given willy-nilly to practically anybody with a pulse without checking on credit history and repayment capacity. This led to the market being flooded with easy mortgage money and there was frenetic housing activity. New areas began to develop as the hunger for housing grew. The price of property began to zoom. Investors and speculators swooped down, greedy for quick profits. Houses were sold even before the ink dried on the first sale. But the economy could not sustain this pressure. The fall began leading to countless foreclosures. This in turn led to a depression in the real estate market that depressed the housing industry. Unemployment became rampant as foreclosures led to a snow balling effect. Socio economic problems cropped up related to vacant foreclosed houses.

At the grass root level leaders and groups began to work out ways and means to check the menace. The talks are part of this movement to persuade the Treasury and its secretary, Henry Paulson, to opt for more loan modification programmes. The FDIC has started on such measures but on a very limited scale, said Lewis Finfer of Massachusetts Communities Action Network or MCAN. Others participating in the talks are Brockton Interfaith Community, United Interfaith Action of Southeastern Massachusetts and Essex County Community Organization.

Finfer said, “There are tens of thousands of homeowners in Massachusetts facing foreclosure now because there has been no solution to this. There are tens of thousands more that will go into foreclosure in the coming year. Something more has to be done in this area.”

As an example that is held up the successful measures taken by FDIC for the foreclosure victims of IndyMac, after the former took over the bank. This step is being cited as a gold standard for solving the foreclosure crisis. By it the mortgage loan has been modified and lowered to be 31% of the monthly income of the borrower. To expand the plan nationwide the cost would be $25 billion. Paulson is reluctant to comply so far keeping in view the losses to be incurred by lenders.