New Foreclosure Program Fails To Impress Lenders

The foreclosures prevention program was just recently unveiled by Governor Patrick. However, despite tall claims on this, it isn’t a program that has won over the support of the mortgage lenders who are active in the real estate scenario.

The plan was obviously meant to be a solution that would assist homeowners. Specifically, the program’s scope was extended to those homeowners who were unable to pay off their mortgage payments which meant that foreclosures would be just round the corner so they would lose the only home they ever had.

There were some lenders who had tried to keep the foreclosures processes on hold believing that it wouldn’t hurt to delay since aid would be forthcoming. But this didn’t last for much time. Eventually, most lenders reinforced their stance, bluntly called for immediate payment and if not, go ahead with foreclosures.

Under the plan that was suggested strongly by Governor Patrick, the state would focus on counseling or securing financial assistance to homeowners who were facing considerable or extreme financial crisis. It was also proposed that there should be creation of recruit neighborhood organizations. These would have to work with homeowners and lenders to resolve mortgages that had become delinquent and thus in danger of foreclosures.

The pilot program would thus focus on six main cities. The following were the neighborhoods that were badly hit due to the mounting incidents of foreclosures in real estate segment, namely: Boston, Brockton, Lawrence, New Bedford, Springfield, and Worcester.

Governor Patrick’s administration exerted considerable pressure over a couple of weeks. The intention was to pressurize those sub prime lenders, whose mortgages were spiraling the mounting number of foreclosures, to somehow agree to provide financial assistance for financially distressed homeowners. By accepting that these homeowners were totally unable to pay off the pending amounts that would spiral further, the lenders would have been pressurized to give the homebuyers some sops.

But a majority of the ambitious, money minded lenders shied away from this plan that was proposed by Governor Patrick’s administration.

The plan also encourages the homeowners to sell their homes at the lower prices of the current real estate market so that the reduced mortgage balance can be paid off smoothly and easily. This is called as short sales but the problem is that lenders would suffer loss over the loan. The administration also directs sub prime lenders to make a payment of $5,000 for each house they foreclosed on. The said money would be used to pay the shifting expenses of the homeowners from their own home to a rental home.

However, while some lenders promise to assist the program, a majority haven’t yet taken to it. Will Governor Patrick’s program gather dust on the shelves?

In a few weeks, we would know.

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