Private & Public Solutions to Foreclosure Crisis

The U.S. Department of Housing and Urban Development said today it will suspend its policy of prohibiting the Federal Housing Administration from insuring loans on properties owned by the seller for less than 90 days. The waiver only applies to foreclosed properties marketed and sold by property disposition firms on behalf of lenders and is intended to help stabilize neighborhoods experiencing high rates of foreclosure by reducing the inventory of unsold properties.

The suspension of the policy, which had been developed to prevent property flipping, is effective for one year.

The Department of Veterans Affairs announced yesterday that its loan counselors have helped around 74,000 veterans avoid foreclosure — saving the government nearly $1.5 billion. The agency reported $24 billion in loan guaranties last year and said around 2.3 million loans are outstanding that it has guarantied.

“VA is reaching out to veterans — both those who use our home-loan guaranty program and those who don’t take advantage of our guaranties — to keep people in their homes,” the agency said. “Depending on a veterans circumstances, VA can intercede with the borrower on the veterans behalf to pursue options — such as repayment plans, forbearance, and loan modifications — that would allow a veteran to keep a home.”

Freedom Financial Holdings Inc. hopes to boost its revenues to more than $60 million next year and to more than $100 within another two years by jumping into the foreclosure prevention counseling business, an announcement Tuesday said. The Fort Wayne, Ind.-based company will negotiate as an intermediary the re-writing note terms, modifications, forbearance agreements and short payoffs. It will also negotiate transfers of deeds in lieu and access to legal counsel.

The Ford Foundation announced Thursday it has provided a $2 million grant to support the Consumer Credit Counseling Service of Greater Atlanta. CCC will use the funds to increase its counseling staff by 80 employees and open an additional counseling facility in metro Atlanta. The service has implemented new technology that significantly speeds up loan modifications and other solutions for delinquent borrowers.

The foundation said it plans provide around $8 million in foreclosure prevention grants through the summer.

Apply2save.com issued a press release indicating it helps delinquent borrowers by negotiating with their lender to accept one of a variety of workout plans. The loss mitigation specialist noted time is of the essence when a home is close to foreclosure, especially since a loan modification process can take from 30 to 60 days to complete.

Consolidated Credit Counseling Services warned delinquent borrowers about a number of scams targeted at people facing foreclosure. The company recommended that borrowers contact their lenders directly, avoid making payments to someone they don’t know and get advice from a lawyer or friend before signing any forms. Consolidated said it offers foreclosure education and counseling.

The American Bankers Association released recommendations for borrowers on how to deal with a potential foreclosure. The primary advice the trade group offered was to immediately contact the lender and talk about problems, and get financial counseling to come up with a long-term plan. ABA noted a missed payment will haunt a credit score for a long time.

“No one wants a foreclosure — the homeowner or the banker,” ABA Chief Operating Officer Diane Casey-Landry said in the statement. “Banks will work with borrowers to keep them in their home and maintain a long-term relationship.”

The AARP is calling on New York state legislators to come to an agreement on a final comprehensive foreclosure prevention bill introduced by the governor. The state reportedly saw more than 52,000 foreclosures filed in 2007, and 1,100 foreclosures were filed each week during the first quarter of this year.

“We believe the Governors bill will not dry up credit for those seeking loans in either the traditional mortgage market or the subprime marketplace as the financial industry contends,” AARP said in a statement Tuesday. “It is very clear that the financial industry cannot clean up the mortgage crisis on its own and government oversight is needed.”

Members of the Ohio Delegation will participate in a Congressional field hearing of the Financial Services Housing and Community Opportunity Subcommittee to address the growing foreclosure problem in the state, a press release Thursday said. The event will consist of a hearing featuring two panel discussions on the various issues facing the housing community in Ohio and solutions on how to address those issues.

ForeclosureRadar reported Wednesday that lenders took back $10.4 Billion in California loans as a result of foreclosure sales in May. Notices of default filed were 43,011, down 3 percent for the month, while notices of trustee sale increased 16 percent in May to a record 34,564. Auction sales were up 12 percent to 25,523 — with 24,831 receiving no more than the opening bid by the lenders.