Foreclosure Prevention Measures Begin to Trickle Down
The foreclosure prevention measures being initiated by the Obama administration is beginning to trickle down to the ground levels. The new federal programme will in all likelihood benefit the homeowners in Twin Tiers that are facing foreclosure. This is the opinion of the housing counselors of the area. But they are also warning that the homeowners must alter their spending habits and not depend solely on the new measure.
Jane Galvin a senior housing counselor of First Time Homebuyer said, “It’s really important for consumers to go back to the basics, brush up on their money management skills and track their spending so they can be prepared. If their spending habits don’t change and they are still spending above their means. then it’s only a matter of time before it all goes back into the same cycle of delinquency.”
The programme (Homeowner Affordability and Stability Plan) went into effect from 4th March but it would take a couple of weeks before the banks are prepared to deal with the hordes of foreclosure victims desperately searching for assistance. The $75 billion set aside for it, is estimated to benefit 7 million to 9 million facing foreclosures in the country. The Housing Affordability and Stability Plan comprises of two sections. It gives those who are facing falling values of their property to avail of low-cost refinancing. Many of them have gone underwater with loans being larger than dues and this prevents lenders from allowing refinancing.
The second clause might create consternation among the counselors and the clients. According to it, a borrower on the brink of defaulting will get an opportunity to modify payments for a period ranging from two to five years. The mortgage servicers will receive a fee of $1,000 for each loan modification. So long as the borrower does not default and remains current on the new modified loan, the servicers could get up to $1,000 for reduction of mortgage balance for each of the forthcoming five years.
The Bush government had initiated similar programmes but with more restrictive conditions. It was a great challenge convincing the lenders to agree to modifications said Betsy Corman of Tri-County Housing Council of Big Flats.
The biggest hurdle for modification comes up in the cases of those mortgages that had been parceled, sliced and sold to various investors across the globe. These investors are reluctant to suffer losses. The servicers fear that the investors may sue them if they negotiate loans of their own accord.
[...] The residents of Ohio will get a six month respite from foreclosures but the provision that would have allowed the judges to alter terms of the mortgage was cancelled. But supporters of the bill are happy that at least something has been won – it being better than nothing. The House Bill 3 will impose a new fee of $750 for filing foreclosures. The money would go towards funding counseling for foreclosure prevention. [...]