Candidates Disagree on Foreclosure Fix
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by Nia Knowles
- February 20, 2008
- Mortgage 411
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Daily Real Estate News | February 20, 2008
As the presidential primary in Ohio approaches, Sens. Hillary Clinton (D-N.Y.) and Barack Obama (D-Ill.) are highlighting their different housing proposals. Voters in Ohio especially are concerned about the housing proposals because the state has one of the highest foreclosure rates in the nation.
Clinton insists that government intervention is necessary. She proposes ceasing foreclosure proceedings for 90 days to allow borrowers and lenders to work on modifications, instituting a five-year interest-rate freeze on adjustable-rate subprime mortgages for primary residences only, and the use of government-backed mortgages to refinance borrowers who can no longer manage their monthly payments.
Meanwhile, Obama says that government involvement will force lenders to put the brakes on making new loans and modifications. Instead, he is focusing on stricter penalties for predatory lenders, tax credits for mortgage interest, and a $10 billion fund dedicated to preventing foreclosure and assisting first-time buyers.
Source: The Wall Street Journal, Nick Timiraos (02/20/08)
William H. Steiner
February 20, 2008 at 8:29 pm
The proposal from Mrs. Clinton is one that all of us that have been impacted would applaud due to the fact it could make a difference for so many Americans. The banks themselves would directly benefit when they could start turning things around.
Allowing 90 days for borrowers to work out new arrangements with their lenders would simply not be enough time for the hundreds of thousands of loans that would require attention. It’s simply time wise impossible although the idea makes sense motivating the borrower to contact their lender is vital to the plan. The plan of this size would require a roll out time table closer to 14 to 24 months. This would take a very large commitment from all involved. I am not sure that even with that time frame the banks have sufficient staffing to handle such work including originating new loans during the same time.
With regards to the borrowers that can show that predatory lending practices were involved the lender should give the borrower a reduced rate based on their ability to pay or based on their debt ratio. This by means of making sure the borrower and lender have a fair chance to assure a loan to be paid promptly. This is good for the banking industry and protects more homes from foreclosure. This is good for the economy.
In addition to Obama suggestion the banks need as they have recently put guidelines in place that require the borrower to have the debt ratio that will support means of proof to be able to pay back the obligation without risking more foreclosures. This is simple common sense. Greed has showed that in the short run be very profitable but in the long run the losses outweigh the gains.
I work in Loss mitigation now for over 6 months and have been almost 100% successful in working files with the banks as long as it makes sense that the borrower can show a means of paying their loan on time, giving them a second chance to get back on their feet.
I for one am a true believer that there is a solution to the foreclosures and I for one wish to be part of that solution. Borrowers have the chance now to take the step and turning this around. Question is that will the banks listen and want to help? Right now the alternative would be further losses in the Billions if they don’t.
William H. Steiner
Loss Mitigation Specialist & Founder
Freedomloan90 program
http://www.freedomloan90.com