Fresh Efforts to Control Foreclosures by the Administration

As the crisis of foreclosure does not seem to give any relieve to the homeowners, so the Obama administration intends to enlarge a program that aims to help the distressed homeowners for retention of their houses. This will invariably increase the rate of conversions of the distressed home loans. According to Meg Reilly, the Treasury representative, as these loans will be transferred into new ones, the homeowners will enjoy the loans at lower payments on a monthly basis.

According to the officials, this new plan is surely going to add to the pressure on the companies for doubling their efforts on loan modifications as this plan also intends to highlight those firms that have fallen behind with their performances. As per the announcements, the Treasury will strictly withhold the payment of the incentives as long as the companies that are entitled to cut down on the loan repayments do not complete the loan modifications.

According to the modes of payments, the companies can initially collect $1,000 for getting each loan done and this will be followed by an annual payment of $1,000 for at least 3 years. The support of the government that is given from this $700 billion financial rescue program primarily intends to make the companies work towards reduction of loan repayment amounts by paying incentives and this also prevents the incidences of foreclosures of homes.

Despite serious efforts, this program has not only failed miserably but it had to face a lot of criticisms as well. The analysts feel that this problem has every chance of persisting until the next year primarily because the issue of unemployment will decide the number of defaulting homeowners who will be homeless. The increasing number of foreclosures tends to bring down the price of the homes and properties and this also threatens the process of sustenance of the recovery of the economy.

According to a report by the Mortgage Bankers Association there was at least 14% of the homeowners who had mortgages and were lagging with their payments or were steeped in troubles with foreclosures by the end of September. This was a record as this seemed to continue for the ninth quarter at a stretch.

The committee of Congressional Oversight Panel, that scrutinizes the aspect of spending in this bailout program of the Treasury. In its report concluded that foreclosures are a threat to the families having conventional, fixed-rate mortgages and they have to make payments of at least 20% for those homes, which should have been normally in their range.

The report stated that, the Home Affordable Modification Program, “is targeted at the housing crisis as it existed six months ago, rather than as it exists right now.” Treasury’s Reilly stated that this program would also provide aid for the borrowers who are struggling to repay their loans.

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