Posts Tagged ‘process’

With much fanfare housing relief has made its debut but too many conditions will help too few foreclosure victims. The sponsors say that about 500,000 will be helped but what about the cut off date of 1st October excludes many? The Senate Banking Committee passed a housing bill and panel chairperson Dodd was euphoric in claiming that many will benefit. It is however most unlikely that the magic figure will touch 500,000. Experts analyze that at the most 325,000 will be helped. It would cut down the apprehended number of future foreclosures by 8% for the forthcoming years, says analyst Alec Phillips of Goldman Sachs.

The key clause of the bill permits the Federal Housing Administration or FHA to insure new loans up to a limit of $300 billion. This is dependent on a condition – the lender will have to write down a part of the loans and bring it at par with the current appraised value of the units. The official version of bill has not yet been released.

The enforcement of the bill will take off from 1st October although previously it was assumed that 1st June would be the cut off date. The bill is connected to political expediency. The four-month pause will flush out a 1.5 million borrowers who had taken sub-prime loans and whose loans are geared to increase. By the time 1st October comes, many houses would have been swallowed up by foreclosures. Thus those whose rates went up from 1st January 2008 would not benefit from the bill but would be sacrificed to the wolves. The bill will help those whose rates will rise from the third quarter. In May the maximum resetting takes place. They too will not be able to avail of the opportunity of saving their houses. In those states however where the foreclosure process goes on for about a year the bill will help some.

If the Congress had addressed the problem before the massive numbers had reset, a substantial number of foreclosure victims would have been helped and the foreclosure numbers contained. There were however explanations Jaret Seiberg an expert from Stanford Group (Washington research firm dealing with policies) said “there’s upfront planning that needs to occur for this to be successful.”

Political heat is on with heated arguments between Democrats and Republicans. This has largely led to the delay in putting into action positive thoughts of help.

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