Several state and federal initiatives designed to help reduce the fallout from forecasted foreclosures were recently announced. Meanwhile, a growing private sector is capitalizing on the expanding foreclosure industry.
The Homeowner Crisis Resource Center, an online resource at to assist borrowers in danger of losing their homes, was launched, the National Foundation for Credit Counseling announced. The site includes access to certified housing counselors, an online locator and a tool to help borrowers assess their situation and what steps to take if at risk.
Noting that defaults will rise to 2.5 million over the next two years and one in five subprime loans will end in foreclosure, Help4ThePeople.Org and Attorney Richard Ivar Rydstrom are offering a free online foreclosure solutions booklet, "13 Homeowner Solutions to Default & Foreclosure."
Meanwhile, TheMortgageMess.com announced it offers state-specific "Save Your Home" kits designed to walk risky-ARM borrowers through a financial assessment with a questionnaire. Delinquent borrower are guided through a recovery process and given recommendations on executing a plan through telephone scripts, letters, credit repair techniques and refinancing suggestions and calculators.
A feature blog that discusses the tax consequences of foreclosures has been created by tax attorney Roni Deutch, a news release stated. While Deutch said a bill that would eliminate the penalty sponsored by Senators Debbie Stabenow and George Voinovich has not made progress, H.R. 3648, the Mortgage Forgiveness Debt Relief Act of 2007, was unanimously approved by the House Committee on Ways and Means last week.
LOGS Network, a group of law firms and trustee companies providing real-estate-related legal and title services, recently created a full-service home retention assistance business to assist delinquent borrowers whose loans have been referred for foreclosure or bankruptcy legal representation, according to an announcement. The goal of the new business, HEART Financial Services, "is to close the communication gap that naturally occurs when loss mitigation efforts by a loan servicer are interrupted by investor requirements to move those non-performing loans into the hands of foreclosure counsel."
In Kansas, a task force has been created to investigate the causes of the state's increasing number of foreclosures and develop recommendations on how to stem the tide, the office of Attorney General Paul Morrison announced. Kansas Bank Commissioner Tom Thull chairs the new task force.
"Mortgage fraud and subprime lending are significant reasons for this increase and I have formed a task force to investigate the problem further, " Morrison said in the written statement.
Congresswoman Betty Sutton from Ohio's 13th District announced introduced two bills last week aimed at protecting ARM borrowers and deterring foreclosures.
The Foreclosure Prevention and Homeownership Protect Act would create a federal commission to analyze the underlying causes of the subprime mortgage crisis and make recommendations to help borrowers avoid foreclosure and unfair rate increases. The commission, modeled after the Ohio Foreclosure Prevention Taskforce, would be composed of 13 members, including executives from Fannie Mae, Freddie Mac, and the Secretary of Housing and Urban Development.
"Congress has already taken action to address some of the immediate causes of this crisis, but we must also find the root causes and come up with long-term solutions," Sutton said in the announcement. "There's no reason to keep patching a broken system if we can repair the system from the inside out."
The second bill, the Fair Disclosure for Homeowners Act, deals directly with ARMs and would require creditors to send a notice to borrowers six months in advance of a rate change, with an estimate of what the new mortgage rate will be and a list of federal and state agencies that may be able to help if they have difficulty meeting the increased rate. The legislation would also require lenders to include the mortgage reset date on all monthly statements.