Foreclosure: Lenders Cool Response To Governor’s Patricks Foreclosure Remedies

The programme of Governor Patrick encourages short sales and wants funds for moving expenses. If despite help the borrower is unable to keep the house then the next alternative sought out is short sale by which the unit is saved from falling into foreclosure. The state would arrange for counseling and financial support of delinquent borrowers by organizing local help to work in tandem with lenders. Initially the plan will target six cities – Boston, Brockton, Lawrence, New Bedford, Springfield and Worcester.

The scheme has not gone down well with mortgage lenders although the Patrick administration continues to pressurize them. Their sub-prime mortgages are being primarily held for this foreclosure crisis. The maximum number of sub-prime loans was given (2005-2006) to those with poor credit who cannot continue further, now the interest rates have more than doubled. But lenders are not agreeable to allow the units to be sold at prices lower than the current rate and pay off a mortgage after reducing it. In this short sale procedure the loss will be borne by the lender. A second point which caused resentment among the lenders was that the administration wanted them to pay $5,000 for each foreclosed house, towards moving expenses the occupants would have to incur to shift. Cuff, the Director of the Mortgage Bankers Association of Massachusetts wanted to know under what grounds such requests were being made and warned that such generalized measures would be imprudent and unwise for business as a whole. So far only two lenders have agreed to cooperate. The administration has as yet kept open its doors of communication.

Blake, a spokesperson of a credit union opined that sub-prime lenders have not as yet accepted responsibility for the foreclosure fiasco. It is imperative that they should be influenced to participate in the solution procedures. It may be noted that credit unions are not major sub-prime lenders. However it seems that some positive results are coming from Patrick’s plans and more people are continuing to live in their own homes.

The pivot of the plan is cooperation between counseling agencies and lenders. On their part those house owners who are facing foreclosures must immediately make the necessary contact because time is an essential factor. Meanwhile legal steps are being unanimously taken to restrict the lenders and rein them in to avoid future foreclosure debacles.

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