Borrowers Continue To Be Ignorant About Foreclosure Help

February 25th, 2008 | Tags: Foreclosure

Although there has been high key publicity about the government and lenders making a lot of noise about helping borrowers as yet nothing tangible is seen – the borrowers are still groping in the dark for help. Freddie Mac, one of the two businesses houses, sponsored by the government, that acquire mortgages from the lenders, hasreleased a report saying that 57% of the borrowers who have entered the delinquent stage are unaware of the alternative viable options available from lenders that will save them from foreclosures. Three years ago the number was 61%. The fall is nothing much to sing about. It is negligible considering the vastness of the problem.

Freddie Mac conducted this survey from late October till mid November. They sent out a message to borrowers who were late by more than a month in their mortgage repayments, asking them whether they knew about alternative plans. Repayment could be delayed or reduced and restructured among a host of others. Letters were sent by mail with the help of Hope Now – the latter being formed at the behest of the mortgage industry. Based in Washington it sent out about 500,000 letters to borrowers who were faltering in their commitments. In the communication was mentioned the hot line number of Hope Now and further it was high lighted that the lenders were as keen as the borrowers to avoid foreclosures. The lenders lose much more money foreclosing than by coming to an early settlement.

However despite these measures foreclosures continue to merrily march on. In 2007 about 1.3 million properties were foreclosed. This was a 75% increase from 2006. the filings in December 2007 was double that of December 2006. Efforts are being carried on at a war footing on the federal, state and local level to stem the tide. But interest rates are about to rise for millions of those who took sub-prime mortgages because of poor credit records. The anticipated figure as calculated by economist Mark Zandi, is 2.8 million. He told this to a congressional panel.

Two types of borrowers availed of the sub-prime loans – those who wanted to set up homes in houses and those who wanted to speculate. As soon as the saw that business was down they walked away showing little interest in continuing with a mortgage where the value of the house became less than the loan amount.