subject: Loan Restructuring – A Feasible Way Out, Providing A Way for You to Move In [print this page] Loan Restructuring A Feasible Way Out, Providing A Way for You to Move In
Foreclosure is a shocking reality that every member of one's family has to deal with when it happens. Any money spent by a homeowner on home improvements, down payment, insurance, amortization, and other processing fees cannot be recovered after a foreclosure. This, of course, translates to a huge financial loss for the homeowner and his or her family.
To make matters worse, many U.S. companies have downsized their operations in order to minimize their losses. Other U.S.-based companies closed some of their local operations to outsource labor in other countries that offer cheaper labor, like the Philippines, China, and others, leaving many Americans unemployed.
Mortgage borrowers in financial trouble have a great risk of losing their homes. The downsizing of many companies in the U.S. has created a huge sector of skilled and professional workers who became unemployed. This situation has significantly reduced the buying power of many families, making it difficult for them to keep up with their mortgage payments.
The series of foreclosures in the U.S. housing market is a confluence of several factors, including the upsurge in real property valuation, "price-to-rent ratios," and other indicators in the economy pointing to real property affordability. These proved fatal for the housing market, combined with lax lending standards, historically low interest rates, and a speculative fever that gripped investors. Delinquent mortgage borrowers rose, the value of real estate plunged, and then the bubble burst.
These critical flaws require a system overhaul and restructuring of the mortgage financing structure to avert the occurrence of a similar situation in the future. The recent rehabilitation efforts to bridge foreclosures in Daytona Beach, Florida with new mortgage lenders and borrowers may present new alternatives where the rights and obligations of both lenders and borrowers are ensured.
Daytona foreclosures were caused by "bad faith" transactions. These cases call for decisive action to fix the underlying problems that are still in existence today. State and federal officials must sustain their efforts until the problems have been dealt with. Stronger sanctions and penalties must also be applied to those unscrupulous mortgage lenders who take advantage of the vulnerability of borrowers.
Moreover, moratorium may be issued to foreclosures in Daytona Beach, Florida and other cities in the US to give way to the recovery of the housing market, which is slowly regaining its strength. A sound loan restructuring effort may yet enable the housing sector to fully recover.
