First Equity Capital Takes a Positive Step to Contain Foreclosures

February 12th, 2009 | Tags: Foreclosure Notice

The First Equity Capital has taken a positive step to contain foreclosures by launching a private equity fund to purchase pools of non-performing-mortgage securities. It is hoped that this will have an impact on the market and reduce the continuous flow of foreclosed houses into the market.

Generally speaking all the pundits agree that the economy will not make a visible recovery until the housing market reaches a level of stability said John Child who is a managing partner of the firm.

At the root of the foreclosure related crisis is the non-performing pools of securities. Currently they are being sold at heavily discounted prices because of the recession and the immense pressure on Wall Street.

The Plans of First Equity Capital is to purchase these mortgages, bring down the principal to current market standards and allow for realistic monthly mortgage payments that borrowers will be able to afford. This will make the climate more congenial and the borrowers will be able to stay in their homes. At the same time money will start flowing back to the financial body.

The federal government as also the big financial bodies like JP Morgan, Citigroup and Bank of America are talking about loan modification operations. But most of these plans are not considering reduction of the principal to current realistic levels or of extending the term of the mortgage loan. Commenting on this Child said, “Many of these modifications are doomed to fail since so many borrowers are upside down on their mortgage and need some sort of meaningful principal reduction.”

First Equity Capital plans to weigh all the options available so as to prevent foreclosure. Its approach is much more practical realistic than the other loan modification measures. Child explained, “The strategy is a win-win proposition for all the parties involved. Borrowers stay in their homes, financial institutions rid themselves of non-performing assets and investors receive an attractive return on investment. There is a critical need for the private sector to step in and help stabilize the housing market.”

First Equity Capital, LLC was established by First Equity Mortgage and New Vision Title Corporation in 2008. This was done in response to the urgency of the distressed financial climate of the market. The companies realizing the potential of investment as also the necessity of the private sector to fill the vacuum created by the staggering number of foreclosures stepped in with this path breaking plan.