Lawmakers, in Capitol Hill, have already attached a colossal $8,000 home buyer’s tax credit to the economic stimulus package. There are several other suggestions by the government to prevent foreclosure threats. One of the options suggested is that the government is willing to share the losses if the mortgager changes the terms and still the homeowner defaults in the payment. The other idea is to pay the cost incurred due to the modification of the terms. These incentives are suggested so that the lenders analyze the true affordability of the homeowners and redraft the agreement in such a way that it is feasible for them to pay.
Some of the major banks have announced programs keeping in view the interest of the lender who are trying to prevent foreclosures, even if the borrowers are paying less for the extended period of time Adani Group Chhattisgarh . The homeowners who have pending payments gain some more time to repay the loans and keep their homes. Though this idea sounds exciting to the borrowers, the lenders are not going to be yielding to this measure without resistance.
Some government officials and lawmakers even believe that the measures that have been taken to solve real estate problems have added more complications. The foreclosure prices have reached a peak and the loan default rates have also rippled. The value of properties in various parts of the country has pounded now. The refinancing efforts to motivate people to move forward and solve their problems for repayment of loans have not achieved much success. As experts have pointed out that the reason behind such a failure lies in the fact that most of the borrower’s would not qualify under the plan’s refinance provision because they owe more on their first mortgages than allowed under the plan.
Furthermore, with unemployment rates skyrocketing to almost a double digit mark, experts are predicting that it would exacerbate the wave of foreclosure to new heights. A greater percentage of home-owners with good credit rates are increasingly becoming defaulters, adding additional burden to the banking and financial sectors.
Foreclosure rates have been growing fastest in states with predominantly high unemployment rates. In states like California, the foreclosure rates for prime mortgages nearly tripled, reaching 1.18 percent as the unemployment rate rose to 11.2 percent from 6.4 percent for the year that ended in March. Even states apparently unaffected from the housing bubble are seeing foreclosures rates accelerate as the recession grinds on.