Foreclosure Remedies Swing From The Viable To The Impossible

March 11th, 2008 | Tags: Foreclosure

Rising unemployment coupled with sub-prime loans fiasco have led to unprecedented number of foreclosures that is gnawing into the entrails of the country. In the previous year 50,000 residents of Minnesota had fallen back in their payments. Of these 20,500 lost their houses. If nothing is done, the apprehension is that another 30,000 victims will fall prey to foreclosures. The value of these properties will go down by $1.5 billion.

It is not just the borrowers who are affected but the entire nation is indirectly affected. Waves are lashing through the country affecting taxes and stocks. Everybody is looking up to the government to take a more positive role to alleviate the problem. Here comes in a word of caution – the federal government and the law makers should carefully consider all sides and not pell-mell rush in to do something. It might cause more harm than good.

There are more than a dozen plans waiting before the Legislature to help the house owners and the renters. The renters of those houses that are in foreclosure will get more time to reallocate their lives, while the lenders will be doing their best to see that the borrowers can avail of counseling. Steps are also being taken to make it easy for sales to be expedited. Also on the agenda are plans to defer foreclosures for a year hoping that the time gained would allow the Congress to come up with more permanent solutions. The Sub-prime Foreclosure Deferment Act will benefit those who are 65% due in their payments. By it 15,000 residents of Minnesota would most probably be able to continue to stay in the houses that are their homes.

The lenders are looking at the bill with suspicion arguing that partial payments will be unjust on responsible borrowers. Also it should be seen that only those borrowers should benefit who have been victims of fraudulent lending. The borrowers who overreached themselves however should bear the responsibility of the crisis for chewing more than they could digest.

In Washington the Democrats in the Senate introduced the Foreclosure Prevention Act of 2008 that would provide for additional grants for house counseling. The amendment of the Truth in Lending Act will make mortgage documents easier for the layperson to understand. Some legislators are toying with the idea of bankruptcy rules – these could have grave negative consequences.