A Possible Rescue Plan for Foreclosures
July 3rd, 2009 | by admin |In mid-February, President Barack Obama presented a rescue plan for the housing sector to refinance mortgages of as much as 9 million American homeowners in the brink of foreclosure. But several factors have caused the implementation of the plan to be delayed. Government officials are still collecting paperwork from homeowners who need help and are still winding down bad mortgage bets from mortgage finance companies on Wall Street. Until then, we would expect to hear more foreclosure news in both local and national media.
The plan not only targets delinquent borrowers, which are their primary concern, but also those that are in need of some financial relief. The qualified borrowers would need to submit the necessary documents and should be approved for a modification. After that, they would need to undergo a three-month trial period. Once successful, they will be provided with the necessary aid.
According to the chief regulator for Fannie Mae and Freddie Mac, a major housing finance company, one part of the program would not see considerable results until “current activities ramp up in the late summer”. This part of the program will pay mortgage companies in order to decrease the payment of the borrower to 31 percent of their income.
Government officials coordinated with Fannie Mae and Freddie Mac to bring together a big portion of the program but they were only able to contact a small portion of the borrowers in need of assistance.
Only less than 9,000 of Fannie Mae and Freddie Mac’s 30.4 million home loans were able to avail of the emergency sale put up by the companies. That move avoided foreclosure of their homes. In April alone, a total of 342,000 homes were foreclosed in a national level. This is the reason why we constantly hear foreclosure news in all media networks.
These programs are not the absolute solution to the current housing crisis experienced by the country. Officials need to deal with loans under their control through housing agencies. The more challenging part is reaching out to the mortgage investment deals made by Wall Street during the housing boom.
The Obama administration has proposed spending billions to assist the mortgage crisis. But until a solid and fool-proof plan is put up, we may hear more negative foreclosure news in the future.
