Thrift Supervision Officials Are Pressing for Putting a Hold on Foreclosures

February 20th, 2009 | Tags: Foreclosures

Officials of the Thrift Supervision are calling upon the mortgage lenders who come under its regulation, to put on hold foreclosures until the new government under Obama puts forth a programme to help the foreclosure victims.

Timothy Geithner presented a plan to give a boost to the financial sector on Tuesday 10th February that would include a $50 billion measure to help those facing foreclosures. But it would time before the full plan could be laid out. But the delay would cost the nation a lot, said many disappointed consumer advocates and legislators.

OTS has joined hands with the consumer advocates and also with Rep. Barney Frank (Democrat- Massachusetts) to declare a moratorium on all foreclosures during this interim period. This is adding to the pressure being put on the administration to quickly finalize the plan. There is a growing frustration about the government and the industry not doing anything noticeable or effective in stemming the tide of foreclosures.

Geithner also consulted with Shaun Donovan, the Secretary of HUD together with many officials from important banks, non-profit bodies and industry representatives to discuss the measures to be taken. The conference lasted for over an hour and was held at the Treasury offices.

John Taylor of the National Community Reinvestment Coalition said, “The thing that was striking was the uniformity of support for the idea that we can no longer rely on a voluntary system.”

Opinion was strong favouring the government purchase of soured mortgages that are being held by the lenders at a discount and to put the borrowers through a modified mortgage. Taylor said, “I know that is going to cost some people some money, but the truth is the foreclosures keep driving us further into this recession.”

The government spokespersons said that the new measures being undertaken would be more aggressive in nature compared to the peevish efforts taken so far. Pam Bucks who is the Policy Counsel for Consumers Union said, “We want to get a plan as soon as possible because the delay is causing homeowners to suffer even more than they have.” She stressed that the essential factor is Time.

The short-term hold on foreclosures that OTS is calling for could benefit many to get time to work out their options when the government measures are detailed. Bob Davis of American Bankers Association said, “I view this is a prudent reminder to banks that a new solution may be coming.”