Foreclosures May Be Set for Another Artificially Created Drop in Rate of Occurrence- By: M Shane
It is common knowledge that there are many homes with delinquent mortgages on the verge of being foreclosed on; and while the real estate market is struggling to recover, more foreclosures will supply the housing market with more properties for sale and consequently help to drive down the value of the market.
What might be news to many home owners is that to help combat the potential flooding of the real estate market with foreclosures, the government is considering prohibiting lenders from proceeding with foreclosures on homes if they have not first been considered for the federal government’s Home Affordable Modification Program.
Much of the onus for getting these home owners assessed according to the program guidelines will rest with the lenders; the government is looking at making the lenders responsible for contacting any home owner with a 60 day delinquency. What the government decides are “reasonable measures” to contact home owners are, at this time, not stated.
Any home owner with a mortgage that is 60 days delinquent would be offered access to the program by their lender and would then go through the qualification process. Home owners with homes already involved with foreclosure proceedings would have the process halted until their situations could be assessed according to the HAMP guidelines.
This program is far from revolutionary however; many lenders have already been putting foreclosure proceedings on hold while home owners go through the process of HAMP qualification. The requirement to proceed in this way will even the playing field for all home owners with delinquent mortgages.
Another aspect that the government is considering adding into the mix might just help home owners even more than just loan modification on its own; according to the Treasury Department, the government is considering adding in the opportunity for more loans to have principle writedowns available. Principle writedowns allow home owners to not just have their interest rates lowered or their payments stretched out over longer terms but actually have the amount of principle owed on their homes brought more in line with the value of their home.
Whichever options that the government decides on to add to this proposal will determine how useful it is to home owners in distress. While the basic plan of having foreclosures delayed until at least the qualifying process for the Home Affordable Modification Program is complete will be a relief for many people; but the option of having the principle of a mortgage reduced to be more in line with the actual home’s value would be invaluable to every home owner.
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