Troubled homeowners who took out home loans from Freddie Mac and Fannie Mae have been given an early holiday gift. The two housing institutions have announced a six-week moratorium on foreclosures. This moratorium is expected to give homeowners time to negotiate with Fannie Mae and Freddie Mac. For distressed homeowners who took out home loans from other mortgage banks, they might also be given reprieves in a week or two as more mortgage banks have been considering moratoriums.
According to financial analysts, even borrowers holding underwater mortgages can save their homes from foreclosures. Underwater mortgages refer to loans held by borrowers who owe more than their homes are worth. Since 2006, underwater loans have become common as the prices of homes kept falling following the subprime crisis.
Economists found that most underwater mortgages are in geographic areas where home developers have overbuilt. The supply of homes has surpassed need to a level that enabled a lot of persons to take home loans even if they really can not afford to buy a house. When the prices of homes dropped to very low levels, it was easy for these borrowers to walk out their loans because walking out has become the better option.
Mortgage analyst George Roddie said that foreclosures may have peaked out in communities with the highest foreclosure rates. Vulnerable borrowers in these hard hit communities had been forced out from their foreclosed houses immediately following the subprime meltdown and many others followed in the months after.
Another reason Roddie thinks foreclosures will no longer rise at a rate as in previous months is the increased willingness of mortgage lenders to negotiate with borrowers following the release by the U.S. federal government of billions of dollars to enable them to help distressed borrowers.
For borrowers who have been delayed in their monthly payments, they should contact their mortgage lenders to negotiate a schedule that will enable them to avoid foreclosure.
Leticia Carvalho has been educated in the finer points of the foreclosures market over 5 years. Read about the following article Time Out for Foreclosures by Leticia Carvalho.
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