Foreclosures: Officials Pool In To Check Foreclosures

Posted in Foreclosures, December 3rd, 2007 |

The statistics in Washington, Sacramento and the Inland Empire is grim with one out of 43 residences stained with foreclosure. Officials are scrambling with funds, legal steps and plans to help the house owners stay in their homes and snub predatory lending methods leading to foreclosures. But the clock is ticking.

Speaker Nunez is pressing for a special Legislative session to deal with the increasing foreclosure crisis. Democrats have joined in proposing remedial packages. Washington remained concerned with the national fall out. Paulson, the Treasury Secretary conferred with bank representatives and lenders to find out ways to keep interest rates at bay. He wants more positive action that shows quick results. At-risk borrowers need to be identified quickly.

Governor Schwarzenegger of California saw to the sanctioning of a $1.2 million education awareness programme to help both lenders and borrowers wiggle out of the stigma of foreclosures. The forthcoming four to six years will see thousands of California’s residents threatened by a scheduled jump in interest rates.

The government fears that if foreclosures are allowed to go unchecked there will be a further slump in the real estate market causing increasing loss – a vicious circle of no return. So the plan has to be such that people can stay in their own homes and yet the mortgage industry will continue to be active and healthy.

One idea is to encourage lenders to continue with the low ‘teaser’ rates for some more time. It will allow the market to get back on its rails and consequently the borrower will get a chance to refinance with the house price stabilizing. Then it will be a smooth entry from the floating into the fixed prime mortgage zone before defaults start off. Schwarzenegger had made similar suggestions after talking with four lending giants in California. California tops the offenders in the foreclosure crisis with a ratio of 1:88.

The stumbling blocks the new plans are coming up with is that the traumatized borrowers are reluctant to even talk to the lenders although the latter have sent out signals that they are willing to be amenable. In more than half the foreclosure cases the loan officials have failed to reach the borrowers. But soon it will be too late.

In Sacramento the Democrats have funded $10 million for counseling purposes. Bans will be imposed on bonus incentives for agents and also on penalty charges.