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OTS Calls to Freeze Foreclosures

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By : John Cutts    99 or more times read
Following US Treasury Secretary Timothy F. Geithnerís statement about the new governmentís plans of rescuing the countryís ailing economy, the Office of Thrift Supervision or OTS called for lending groups to temporarily stop releasing foreclosure orders.

The $50 billion rescue fund allocated to help homeowners facing the threat of having foreclosed properties is expected to be released within the week. Despite this and other moves of the government to take action against the worsening economic situation, still some lawmakers, officials and consumer advocates see that this plan is too slow and the fund allocated too low. A lot of people have anticipated this announcement, and many are disappointed with it.

However, there is nothing much to do. For this, OTS and other consumer advocacy groups are calling leaders to release a moratorium on impending foreclosures. Pam Banks, a policy counselor of Consumers Union, says that time is very important and actions should be implemented to help homeowners who are suffering the consequences of the economic recession.

Releasing a moratorium, therefore, seems to be the most practical thing to do while banks and other lenders are waiting for the rescue funds to be released. While banks are awaiting the release of the governmentís rescue fund, they could temporarily release a moratorium to prevent more foreclosed homes. Upon release of the assistance, banks can then modify mortgages and accommodate more clients who need assistance and loan adjustments.

According to some government officials, the upcoming program is aimed at modifying loans and stopping foreclosures as an effect. This is a more aggressive and a more proactive approach than the previous Bush administrationís bailout plan and mortgage financiers Freddie Mac and Fannie Mae.

President Obama even expressed his own desire to provide utmost assistance to homeowners and other groups and individuals who may be risking their properties to be foreclosed. The new administration therefore wants to do everything it can to help prevent more cases of foreclosures.

Through the past months, there have been an increasing number of foreclosed homes and properties. Aside from damaging the individual homeowner, this also has a negative effect on the community and the country as a whole. Since foreclosed properties have very low values, a community or state with several foreclosed homes will generally have a low value, therefore pulling the economy further down.

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