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Program Committed to Reduce Foreclosures by State

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By : John Cutts    99 or more times read
The release of the guidelines of President Obama’s $75 billion program on the promised date shows the administration’s commitment to solve the national foreclosure crisis. As foreclosures by state are reduced, states’ housing markets recover, leading to a national housing market recovery.

Brian Bethune of IHS Global Insight supports the program and cites the modification scheme as the central feature of the program. He said the more lenders that implement the modification scheme, the faster the foreclosure crisis is resolved and the faster the states recover as their foreclosures by state are mitigated.

Some however see the program as lacking in some aspects. Lawrence Yun, leading economist of the National Association of Realtors, said a scheme to subsidize mortgage rates for Americans planning to buy a home or for borrowers planning to refinance their loans would have been very helpful. Lower mortgage rates would have been a more effective way to lower foreclosures by state and the national foreclosure rate.

There are also other factors that will affect the success of the administration’s program, now called Making Home Affordable Program. The unemployment rate is continuously rising as more and more businesses are downsizing or closing, increasing foreclosures by state.

The program is also voluntary, similar to the foreclosure programs launched by the Bush administration. It is hoped however that the cash incentives, which were not offered by the Bush programs, will entice mortgage lenders to work out modifications. The lenders need to show their investors that offering loan modifications to distressed borrowers will reduce foreclosures by state and will improve the conditions of states in which they are investing, in addition to improving the national economy.

For Americans who have been paying faithfully their loans month after month, Obama’s program will prevent further depression of their home’s current value. If the federal government does nothing to reduce foreclosures by state, home prices will continue their downward slide pulling down with them all properties, whether owned by responsible taxpayers or by foreclosure-distressed borrowers.

John Taylor, chief executive of the National Community Reinvestment Coalition, is optimistic about Obama’s program. He said the program has a real chance of succeeding in solving the foreclosure problem. He is hoping the mortgage lending industry cooperates with the administration.

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