Still Foreclosure Solutions
The Government wants to allocate 75 billion dollars to over five million Americans
who still have debts and risk being foreclosed, to help them sell more quickly. Foreclosure of so many owners would risk to slow economic recovery, or even back the country deep in crisis. Thus, starting with April 5, debtors who were not qualified in prior anti foreclosure crisis programs will be encouraged to sell their homes in a shortest time, even if their property is worth less than when they contracted mortgage.
They want to optimize and standardize the process of short sales, so that it is much easier for both debtor and creditors, according to U.S. Treasury advisers. To bring all parties to negotiate (debtor owner, creditor financial institution investors, and probably other investors, in favor of whom the mortgage was), the government intends to subsidize each of them.
Thus, the creditor bank would receive $ 1,000, other 1000 being directed to a second loan (if any); the debtor owner would receive $ 1,500, as "relocation assistance". If the incentives will prove sufficient, it is estimated that the program will have these benefits: creditor banks will recover more money if debtors sell their homes on their own, than if they were foreclosed, and debtors end up with clean credit history and avoid the risk of a trial. The community as a whole has to gain from faster sale, knowing that often neighborhoods with
bank foreclosure buildings are thieves target.
The program is however, received with caution by banks, which often are only administrators of receivables transferred to investment funds. Thus, say bankers there is no opportunity for the customer to hide from responsibility. If he does not prove that he has done his best, that he has spent all his savings, that he has taken credit, but meanwhile he has lost his job and must move to another town, he will not be given the right to sell fast.
Although, for now, lenders will allow debtors to sell their homes only as a last resort, it seems that standards will be lowered and this procedure will be used more frequently, with the potential that of the advantages envisaged benefiting not only debtors and their creditors, but also the entire American society. Proliferation of these so-called "strategic failures" in recent months, is preparing the ground for a new financial crisis because banks own homes that no one wants any more.
Americans who will no longer pay their mortgages and give up, voluntarily, to dream properties - bought during the property boom in 2007 - threaten banks with a new financial crisis. The amount to be reimbursed to banks is much higher than the house value, so more and more people find it e absurd to pay.
Not less than 11 million U.S. mortgage borrowers (25% of all mortgages) are in such a situation. However, not all have courage, suddenly, to give up, not necessarily a home, but their dreams and to return to the status of tenants. Nevertheless, gradually, more and more
bank owned properties emerging in the country.
by: Julie Thompson
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