Here we go again another government attempt to stop foreclosure. With government initiated loan modification programs failing to put a stop to the foreclosure crisis.
Ben S. Bernanke, Chairman of the Board of Governors of the Federal Reserve System, told congressional leaders in a letter yesterday that the Fed will seek to renegotiate mortgages it owns that might otherwise enter foreclosure.
It is unclear how many homeowners stand to benefit. Under the program, the Fed can reduce what a homeowner owes on a mortgage, lower the interest rate, lengthen the term of a loan or take other steps to keep a loan from defaulting, if doing so would offer taxpayers a better long-term payoff than foreclosure.
The interesting thing is that this has been going on now for almost a year through reputable loan modification companies.
Scott Jenkins, a homeowner in Irvine CA, worked with Mortgage Modification Legal Network located in California and says. I felt like my mortgage company was giving me the run around and I needed help now. I contacted the Mortgage Modification Legal Network and my mortgage modification was done in 10 days. I truly believe that waiting on the government or federal programs would of landed me in a shelter or even worse.
This latest attempt to help homeowners should be taken with caution. The new policy applies only to mortgages the Fed controls through three companies formed to hold mortgage-related assets it acquired last year from the collapse of investment house Bear Stearns and insurer AIG. Those three companies hold roughly $74 billion in assets. That is only a fraction of the total troubled mortgages and mortgage-backed securities
As in the past government announcements seem to be the lifeline homeowners need to rescue them from foreclosure. Then you look at the fine print. Individual borrowers are unlikely to know whether their mortgages are owned by the Fed, but if they qualify for Loan Modification, they would deal only with their mortgage servicing company.
Trying to figure out if you mortgage is owned by the Fed is more than likely going to be a timely task, something homeowners facing foreclosure can not afford. A loan modification can stop foreclosure and is usually the best option for homeowners. It is recommended that you contact a loan modification attorney for assistance.
The Federal Reserve also announced it will use new tools to stimulate the economy and curb foreclosures. The Federal Reserve on Wednesday kept its benchmark lending rate near zero and said it’s likely to stay that way for some time, while also signaling new efforts to lower home mortgage rates.
The Fed left its target for the fed funds rate unchanged at a range of zero to a quarter-point. This ensures that most consumer lending rates will remain unchanged, too. The Fed promised new steps to boost lending to consumers. It also suggested that it would soon purchase Treasury bonds to decrease other lending rates notably, home mortgage rates and long-term corporate loans.
The Fed has also accepted collateral spurned by private lenders, expanded the kinds of institutions that can borrow from the Fed and extended repayment periods.
All this being said the probability of this having a big impact on the economy and foreclosures is low. A report on Friday is expected to show the economy contracted at a 5.4 percent annual rate in the final three months of last year, which would be the steepest falloff in activity for any quarter since 1982.
Job loss continues to rise and there seems to be no end in site with close to 100,000 nationwide job cuts just this week alone.
Anthony Dean has helped many home owners with the loan modification process. See how he can help with your loss mitigation here.WeSaveHomes