Principal Reductions would require banks to modify loans and write down the principal owed to reflect a home's value on the current market. Lenders would face large losses if they wrote down large portions of their loans creating decapitalization for the banks.
Stabilize Home Prices some lenders are leasing homes they foreclosed on back to the original owners to help stabilize homeprices and neighborhoods. Another method to stabilize prices is to control the release of distressed inventory onto the market. Many lenders are doing this to slow the erosion of home prices and minimize the losses they record on their books.
Help for Unemployed Workers The Mortgage Bankers Association announced that it was considering a program to help qualified borrowers who have lost their jobs so they can stay in their homes while they seek new employment. The foreberance program would have loan servicers reducing the borrower's mortgage payment for up to nine months. The payment would be reduced to an affordable level based on household income. The association has asked the government to add this tool to the Home Affordable Modification Program.
Freeze Foreclosures under this program judges would be given the power to temporarily suspend foreclosures for up to two years in order to stabalized the market. Currently, the foreclosure process and evaluation process generally are happening at the same time.
3/24/2010
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