Banks Suspend Home Mortgage Foreclosures Temporarily

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by: marciafreeman
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Word Count: 409
Date: Tue, 24 Mar 2009 Time: 5:21 PM
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Home mortgage foreclosure rates have reached historically high levels. 2008 saw an 80 percent rise in the number of foreclosures from the year before with an estimated 2.3 million consumers dealing with foreclosure. Some analysts predict that in the next few years that number could jump to 10 million. Many borrowers took on a home mortgage that was more than they could afford in the long run, as they felt certain the real estate market would maintain its upward trend and credit seemed easy to come by. An increasing number of consumers who were not eligible for a traditional home mortgage were offered sub prime mortgages. In some cases, borrowers were given loans that required no money down, often without having to verify their income. Assuming the housing market would not go down, others placed their bets on a home mortgage with a variable interest rate. There was so much optimism about the housing market that banks were selling more and more home mortgage loans on the secondary mortgage market to be packaged and sold as mortgage backed securities. Homeowners, lending institutions, banks and those invested in the various home mortgage derived products were left reeling from their losses when the housing market dropped and the credit sector hit troubled times.
Only a month into his new office, President Obama has made it clear that any plan to help stimulate the economy will include help to boost the ailing real estate sector. And any stimulus plan will certainly try to stem the rate of home mortgage deliquencies. The details of the plan have yet to be announced, but it is anticipated that the plan will offer incentives to lending institutions to reduce monthly home mortgage payments for their troubled customers. The new President has made it clear that he would like to assist those in trouble before they become delinquent. It will be difficult task to determine who will qualify for assistance and who will not. For those who will qualify, a rate reduction or a postponement of principal might be options offered to make a home mortgage more financially manageable. Modifying a home mortgage is usually less costly to a lender than to have that loan go into foreclosure, so banks and lending institutions are waiting to make decisions until they know the specifics of any plan to help the housing market. In the meantime, some banks have suspended home mortgage foreclosures until they know how the plan will work.

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