For property owners who have foreclosed on their mortgages, there are a few key facts to keep in mind in light of the federal government’s planned bailout of the foreclosure market. Lawmakers still have many important issues to settle before any of the money from the bailout will start trickling down to foreclosed owners. And as with other regulations regarding bankruptcy and foreclosure policies, the specific details of the plan will likely change multiple times before it is ultimately passed.
As part of the current proposed plan, mortgage payments would be made directly to lenders by homeowners. This is significant to chapter 13 filers because, at present, many chapter 13 trustees require payments to them as part of the agreement, thereby ensuring them a 10% commission over the life of the plan. With this additional cost, chapter 13 plans are often unaffordable for many who would otherwise benefit from filing.
The IRS has also introduced a new policy aimed at helping property owners who need to either refinance or sell their homes in the face of foreclosure. Under their new plan, homeowners who are facing IRS liens for unpaid taxes can instead make those liens secondary to others by lending from organizations that are either restructuring or refinancing the loans. By reducing and/or removing the liens when short sales are being set up, it will now become easier to get loans because the liens of lenders will be the first ones in line.
Video: How to Avoid Foreclosure
Taking advantage of the bailout
National and local banks across the country are already taking advantage of the beginnings of the federal government bailout. They are using millions of dollars from government purchases of preferred stock to lend money, leverage their assets, and increase balance sheets. The U.S. Treasury Department’s TARP (Troubled Asset Relief Program) has been instituted to stabilize the economy and increase the credit flowing to consumers.
How does this affect the average consumer? The money given to banks will provide them the capital necessary to greatly increase their lending abilities. By adding to banks’ existing capital bases, the bailout will enable banks to leverage balance sheets more by expanding loans as well as deposits. Growth at this level will directly affect consumers seeking loan opportunities and also encourage faith in depositing and maintaining accounts.
How to Avoid Foreclosure
Video: Banks and the Fed try to reduce foreclosures
There are a number of ways for property owners to avoid going into foreclosure on their homes because of delinquent payments. First, do not ignore any letters you may receive from your lender. Call your lender’s loss mitigation department if you are having trouble making your payments. Secondly, stay in your property. If you leave or otherwise abandon it at this stage, you run the risk of not qualifying for assistance. A third option is to call the Housing and Urban Development (HUD)-approved housing counseling agency. Someone there will direct you to your nearest counseling agency, where you can find information on private and local programs that can be of help in your current situation. The number for the HUD agency is 1-800-569-4287 (or TDD 1-800-877-8339).
Mortgage brokers across the country:
Adenike Fasanya, Marvel Ventures Mortgage, Inc., Chicago, IL (773) 779-1190
Michael Flanagan, Secure Mortgage Company, Houston, TX (713) 623-5103
Gary Franks, Ventana Mortgage Corporation, Tucson, AZ (520) 885-9594
Paul Martin, Fortius Financial & Real Estate Consulting, Atlanta, GA (770-333-6127)
Jessica Lanning, Lanning Financial, Inc., San Francisco, CA (415) 651-1156
David L. Robnett, Community Lending Services, St. Louis, Missouri (314) 574-9222