More Proposals to Contain Foreclosed for Sale Properties

Even before it was publicly known that only 160,000 homes were saved from becoming foreclosed for sale properties under the Home Affordable Modification Program, lawmakers, housing advocates, economists and centers of learning have been crafting and publishing their proposals to help contain foreclosure for sale properties across the country.

Among the proposals already published are the rental scheme, which enables homeowners to remain in their foreclosed for sale homes as renters for a number of years; the mandatory mediation scheme, which requires lenders to work out loan modifications under the supervision of a judge; and the revival of the defeated judicial modification bill, which authorizes bankruptcy judges to order lenders to reduce the monthly payments of distressed borrowers by reducing their principal or their interest rates.

Another set of recommendations is from the Center for American Progress. The center largely supports most of the schemes offered by HAMP and lauds its objectives, but it is calling for the infusion of more power into HAMP so more mortgage lenders are enjoined to modify distressed loans and contain foreclosure for sale inventories across the country.

The center reminds the Treasury Department that is has power over the country’s largest lenders because they have received billions of taxpayer money from the Troubled Asset Relief Program, although several of them are already looking for ways to pay back immediately the TARP funds so they can get out of government control.

One major proposal by the Center for American Progress is the use of outstanding warrants to force lenders to improve their HAMP performance. The center suggests that the Treasury acquire the loan servicing rights of recalcitrant mortgage servicers in exchange of some warrants and then sell these servicing rights to loan servicers who have been helping carry out the objectives of HAMP.

Another key proposal by the center involves real estate mortgage investment conduits, which are special trusts that issue mortgage-backed securities and which do not have tax liabilities.

The center suggests that Congress revise the tax code and remove the tax benefit for REMICs that are holding a specified percentage of delinquent mortgages. This tax benefit removal would force mortgage lenders to modify loans or help borrowers refinance under the Hope for Homeowners program, which is a better program for underwater borrowers.

All in all, the center contends that containing foreclosed for sale properties is key to ending the housing crisis and sparking the start of national economic recovery.

Related Posts:

• Mortgage Insurers Help Foreclosed House Prevention Program
• Suspension of Foreclosure Will Have Less Impact Locally
• Chase Opens Center to Aid Borrowers Avoid Home Repossessions
• Web Portal to Speed up Repossessed Homes Program
• Bills Bring Hope to Reducing Indiana Foreclosure Homes