Administration Coming Down On Foreclosures
O’Malley’s stand taken against foreclosures is full of punch. It deals with multifarious issues while giving some concrete relief to the house owners. The lenders are being made accountable to a large extent. The proposal outlines the fact that the government alone cannot do anything. The private sector must come forward and take a leading role.
In Maryland the numbers of foreclosures have been steadily rising. In November 11,017 foreclosures were listed – an increase of 8.5% from what it was during the same month in 2006. Prime loans increased by 9% to 5,574 while there was an 8% increase of sub-prime loans with the number being 5,443.
Governor Martin O Malley has presented a package of reforms that looks to the future and will in all probability benefit thousands of Maryland residents who had taken sub-prime mortgages. Within two years these will reset and leave them exposed to the dangers of foreclosures. A loan pool of $4000,000 is to be set up to help the house owners financially. Tougher licence laws will rein in the mortgage brokers. The most novel plan of all is making it conditional for loan servicers to document and detail the loans that have gone into default – this being part of their efforts to help the hapless borrowers.
Consumer advocates are alleging that the lenders are not refinancing the loans although they had promised to do so. Freddie Mac has conducted a report according to which 60% of the borrowers never talk directly with their respective bankers. But of those who open up communication with the lenders, 80% get relief. The first time buyers are advised to take part in loan counseling programs to understand the financial pros and cons.
Amongst other remedies a bill would extend the period of notification of foreclosure from 15 to 45 days. The bankers association of Maryland supports this idea. Another bill is in the offing – it would necessitate lenders to check on the ability of the borrower to repay the loan.
The recent move by the governor of Maryland will help those who are not as yet in foreclosure but facing the risk of entering it. But those who are already in the soup has little chance of getting out of the burning cauldron. Meanwhile the entire local and state government as well as the local community are kept at ransom by the foreclosure crisis.
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