subject: Government Proposes Measures For Stopping Foreclosures [print this page] Foreclosures are sweeping across the countryForeclosures are sweeping across the country. While the economy is much to blame for the problem, banks and mortgage lenders are also to blame for the situation. When the real estate was booming, home owners took mortgage loans with adjustable rates and really easy credits. They expected that the real estate would go up really well and this would mean that the value of their investment in the real estate market would definitely rise up. Since this wasnt the case, homeowners were unable to make the mortgage payments as the value of the homes crashed, the recession set in and people lost jobs making it unaffordable for them to make the huge mortgage loan payments. This led to foreclosure that has continued unabated for the past 5 years.
There are certain states such as Texas, California and New York that has seen the maximum number of foreclosures. Its assumed that that the problem will get a bit better, but on the whole the situation of foreclosure is quite grim. One of the problems that led to this problem was the adjustable rates for the mortgage loans that the homeowner took. To begin with, the rates are lower in the beginning and start climbing later in the term period. Most homeowners are caught unawares and this causes grave problems for the repayment of the mortgage loans.
Currently the problem is that the value of the homes has drastically come down. This is making it difficult for the homeowners to also refinance the loan. Even if the homeowner has impeccable credit record and credit scores, the mortgage lenders are only willing to refinance the loan up to the extent of the current value of the home.
The foreclosure situation has had the government worried and has initiated some measures to combat the problem. The government has set up a fund of $200 million to pay for the prevention of foreclosures by distributing it to the states that need the funds to stabilize the real estate market. Another proposal that has been envisaged by the government is to have nonprofit money distributed by the government to those home owners to save them from foreclosures. This will help the distressed home owners to make the payments and face off foreclosures. In this way, foreclosures can be stopped and the homeowners can stay in their own homes quite easily.
Another initiative known as the FHA Secure has been started by Federal Housing Administrative (FHA). This is a mortgage insurance program that has been started for the homeowners that have good credit scores and records but are now finding it difficult to make the payments as the interest rates (ARM) has gone up significantly. Accordingly the homeowners can refinance their current mortgage loan with lower interest rates that will make the payments for the mortgage loans much more affordable that they were previously. Accordingly its estimated that more than 240,000 will benefit from the program along with the other government programs that are run to combat the foreclosure problem.
