Lenders Coming Forward To Help Foreclosure Victims

With unprecedented rise in number of foreclosures leading to a socio-economic crisis right across the nation, politicians are beginning to spend sleepless nights. They are hosting workshops and conferences to sort out the issue, roping in the lenders who have an interest in scrambling out of this jam. Too many foreclosures are too costly and time consuming during a phase when real estate market is going down fast. The prime aim is to hold the interest rates of the sub-prime ARM’s.

One of the first leaders to take an initiative is Governor Schwarzenegger of California. He is working in tandem with four jumbo mortgage groups who have agreed to contain the interest rates. The Governor is optimistic that with this sort of a proactive attitude from the lenders, many house owners will be saved. But the borrowers too will have to come forward and play their part.

Sheila Bair, the chairperson of Federal Deposit Insurance Corporation, took the first initiative in asking mortgage lenders to open communication lines with borrowers. It was stipulated that the borrowers would be advised well in advance of the rise and enquiries will be made about the viability of them making the increased payments. If they report in the negative then the rate line will be kept in hold for some time. As yet the time factor however remains vague. The general idea is that the status quo will remain until the market makes a turn and recovers.

Big mortgage firms – Countrywide, GMAC, Litton and HomeEq have offered to temporarily halt the march of interest rates. These four are responsible for 25% of the sub-prime loans. They have calculated that pursuing the course of defaults and foreclosure will in the long run cause them greater loss than not allowing the interest rates to rise.

Stockton ranks first among the cities with 200,000-foreclosure listings. Out of every 31 houses one has been stamped with foreclosure. The third quarter saw a 32% rise in comparison to the second quarter of this year. Stockton also will host a workshop on 1st December to bring about cohesion between activities of all concerned parties. The other badly hit cities are Riverside, Sacramento, Bakersfield, Oakland and Fresno.

The story does not end here. About half a million residents of California are gearing up to face higher interest rates within the next two years.

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