Federal Foreclosure Freeze Is Frozen

by Peter G. Miller
January 8th, 2008

We now have a new stage in the foreclosure war: More begging.

On August 31st the President announced his anti-foreclosure program including the newly-developed FHASecure mortgage from HUD. The President’s plan was a voluntary effort which required nothing of no one but did produce a lot of news releases and resultant media coverage.

The obvious problem is that four months later the Administration’s relief program has not helped many people or lenders. As we have explained, the FHASecure program has now allowed several hundred borrowers per month with delinquent conventional loans to refinance, according to FHA statistics.

Now we have the Secretary of the Treasury, Henry Paulson, back in the news, this time with a remarkably convoluted statement given to securities analysts. Here’s the key point made by Secretary Paulson:

“The industry has developed a systematic streamlining process that replicates normal market actions to fast-track borrowers towards a solution, when possible. The industry needs this streamlining to manage the unprecedented volume of resets that cannot be addressed through individual, loan-by-loan negotiations.

“This third part of the plan has received the most attention; it has also received the most criticism due to the mistaken perception that it abrogates contracts. It does not. Mortgage servicers have contractual obligations to their investors, who are spread all over the world. Servicers will fulfill these contractual obligations by pursuing all loss-mitigation options when it is in the best interest of investors, as they normally would. Investors are part of this industry-wide solution because they recognize the benefits of avoiding preventable foreclosures.”

What could any lender possibly criticize? As Mr. Paulson plainly explains, no lender is being asked to change anything.

Meanwhile, today, another few thousand households nationwide will receive their first foreclosure notice. And tomorrow. And the day after. And so on and so on.

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2 Responses to “Federal Foreclosure Freeze Is Frozen”

  1. BEV Says:

    Hi Peter,
    very interesting and enlightening; back-to-basics exposure on this issue is just what we need–a lot of. I am a broker associate in the State of Idaho, digging-in to all that I can learn about pre-/foreclosures, short sales, owners in distress, etc.
    What I notice more than not in my increasingly frequent meetings and “mini-seminars” with homeowners who are struggling in the foreclosure-information-quick-sand (often labeled “help”), is the notion that lenders DESIRE to foreclose on and “take back” properties.
    Don’t you agree that it is time for a dose of “Foreclosure Fundamentals 101″ for the chunk of America that will “receive their first foreclosure notice… And so on?” I suggest we who can do the schooling, start posting the REAL basics, and let folks know the shocking truth; there are truly helpful steps to take to work oneself out of a foreclosure, and some of these long-held paradigms jsut need to die. Instead of an anti-foreclosure program, how about a PRO-absorbtion program on the part of, particularly, real estate licensees across the country?

  2. Nearly Gold Says:

    FHA loans should be assumable; like they used to be. No one in his right mind would negotiate a new loan under present conditions. Assume – yes. The lending institutions, it seems to me, would like to foreclose and load up on toxic properties, take taxpayer handouts (Tarps and the like) and wait until the housing market “re-booms.” Am I wrong?

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