States urge action on foreclosures CNN Money By Tami Luhby 01-20-2010

States urge action on foreclosures CNN Money By Tami Luhby 01-20-2010

States urge action on foreclosures
CNN Money
By Tami Luhby
January 20, 2010

Cut loan principal for borrowers whose homes are worth much less than their mortgages. Attack the problem of option adjustable rate mortgages. Cut down on red tape.

Those are some of the ideas in a plan issued Wednesday by a group of state officials who have been working for more than two years to stem the foreclosure tide.

The state attorneys general and banking regulators urged the Obama administration and loan servicing firms to step up their efforts.

"Potential foreclosures are being built up in the system, said Tom Miller, Iowa's attorney general. "The efforts really need to be more efficient more effective more timely on behalf of the servicers."

Under the administration's program, eligible borrowers can see their monthly mortgage payments reduced to no more than 31% of pre-tax income. So far, the effort has helped about 66,500 people, with another 787,200 homeowners in trial modifications.

Reduce loan principal: State officials say that servicers should cut the loan balances of homeowners, in addition to reducing interest rates and extending the terms of the loan. This is especially true in places where property values have plummeted. Reducing principal will make it less likely that homeowners will default on their modified loans.

Pay attention to option ARMs: More than 40% of these complex mortgages are delinquent. Even worse, over the next two years, many will adjust, driving up borrowers' monthly payments. Servicers need to address these loans before they fall into foreclosure.

Limit required paperwork: Many homeowners are not receiving permanent modifications under the president's plan because they haven't submitted all their documents. Treasury Department officials should reduce the amount of paperwork borrowers are required to file and speed up the debut of a central portal where homeowners can submit the forms. The portal is currently set to launch at the end of March.

Expand counseling and mediation efforts: State should expand their housing counseling and mediation programs, which require homeowners and servicers to meet before the completion of the foreclosure process.

Suspend foreclosure proceedings: Treasury officials should amend the president's program so that the entire foreclosure process is halted when a borrower applies for the president's program. Currently, only the sale is stopped.

Help the unemployed: Treasury officials and servicers should do more to assist the unemployed so they do not fall into foreclosure. A growing number of borrowers with good credit backgrounds are behind in their payments because of the weak economy.

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Good News If It Transpires

Joe,
Thank you for the information. If this transpires, it would be a real help and value for me and I am definitely sure it will help many others. I pray that it becomes a reality.

Tim

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Tim
Keep on Keeping On !!! Expect it, God has already given it to you. You just need to get out there and grab it!
If you want to follow my journal:
http://www.deangraziosi.com/real-estate-forums/investing-journals/33874

Do not fear, for I am with you; do not be dismayed, for I am your God.I will strengthen you and help you; I will uphold you with my righteous right hand. Isaiah 41:10


Tim,

Thanks for the additional insioght and comment.s I know there are a tremendous amount of programs rolling out to help stimulate the economy and help people with education and jobs. Homes and foreclosures will probably see some interesting programs and 2010 will bring even more. Believe and Achieve! Smiling - Joe

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