Well, 16,000 families across the country are breathing a big sign of relief as Fannie Mae and Freddie Mac are postponing foreclosures until the end of the year.
This is a heck of a Christmas present for the families. What might be the biggest present is these families may qualify for a rework of the mortgage.
The two companies said Thursday that they will halt foreclosure sales between Nov. 26 and Jan. 9, while they evaluate whether borrowers qualify for a new loan modification program announced last week.
Fannie Mae said about 10,000 households would be affected, while Freddie Mac said the changes would affect about 6,000 borrowers who are facing foreclosure. The change does not apply to vacant homes. via msnbc.com.
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This can be a good thing for people in trouble, but the question is still what is going to be done with Fannie and Freddie. If we don't figure out what is going to be done about this mess that they have started then these people may get some help right now, but down the road all of us will be in trouble.
Everyone seems to agree that flooding the market with empty, foreclosed homes does not help neighborhoods maintain stability – either as a way of living, or regarding the value of homes. Empty homes do nothing for a neighborhood.
Recently some organizations are taking tentative steps to allow homeowners who are defaulting on their mortgage to remain in their homes –at least for the time being.
Fannie and Freddie Mac have announced that they are freezing foreclosure sales until after the new year while they review strategies and the future of their organizations. J.P. Morgan Chase & Co. and Citigroup Inc. recently announced foreclosure-prevention programs that aim to reduce interest rates, extend repayment schedules and, in the case of Citigroup, reduce loan amounts, to help borrowers keep their homes. But the programs have focused primarily on loans wholly owned by those companies because they feel they have more authority to rework those mortgages.
HSBC is also making more options available to more people. For example, it is contacting customers before their adjustable-rate loans reset to higher rates and freezing the current rate or allowing the borrower to pay a rate below what the new rate would be. The bank also is lowering fixed rates for selected borrowers. All this in an effort to stave of foreclosures.
One way of stabilizing markets where supply exceeds demand is to regulate supply. That way the people who can buy homes can buy from sellers who can’t afford to stay in their current home. But, amazingly enough, new home construction is still going on – even in saturated markets. Merrill Lynch economist David Rosenberg suggests, only half-jokingly, that the Treasury should impose a moratorium on home building. "It sounds like lunacy, but we have to destroy the housing capital stock to help put a floor under the market," he said.
I applaud their efforts to help families save their homes and at the very least let these families keep their homes during the holidays. But personally, I think they need to look at what packages they are offering to their customers. I have first-hand knowledge of at least one package that is being offered and I question whether or not it is both their best interests and that of the home owner.
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