Many far-reaching proposals are ongoing to help poor homeowners in debt to be bailed out of a difficult situation. Some of them may be assisted through constructive programs that aim at active participation in places such as FHASecure. This program, though moderated through its eligibility parameters, along with Hope Now, tends to have a limited time span of delivering aid.

A more legislative aspect is thus needed to ensure proper prevention of the foreclosure epidemic. Allen Fishbein, the director to the credit as well as housing project allied with the Consumer Federation of America, said that he supports the foreclosure prevention legislation. Though things are still under considered consolidation, there remains no better alternative to look up to or even choose from, under these situations. The legislation under Congress however requires a principal that would get to the bottom of bankruptcy problems allowing judges to revisit the conditions for mortgage contracts which should help them make the homeowners empowered enough to make their payments.

Bankruptcy reformation sounds like one of the most significant changes that could help positively in alleviating foreclosure related problems. Fishbein has even assured that reforms like this will be directly done and does not involve one in any kind of bail out! Some lawmakers would however like to think that normal market pressures would be good enough to correct these problems. Hundreds and thousands of homeowners tend to lose their homes while the Congress fiddles with choices like enacting a government’s solution. Many people even suggest that mortgage payments should be met up with subsidizing solutions to come to a governmental solution that should end subsidizing the market for all those who haven’t benefited from such solutions.

Under these varying circumstances, some of the most appropriate federal responses were to propose policies aiming for the restoration and management of financial independence. According to a statement made by a Heritage Foundation, this ought to work out fine enacted through the federal policies only.

On his Saturday address to the assembly, President Bush has said that the government is ready to help any responsible homeowner who seeks to get over this rough patch. However, most of his actions belie the responsibility of not causing unnecessary damage to the majority of the people. So, the public does not expect anything hugely beneficial from the President, who also opposes any proposal regarding artificial propping up of housing prices. He takes this stance as nothing less than delaying the correction of a long-winding and prolonged problem.

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Foreclosure law suits have been filed by both National and foreign banks in this county with Deutsche Bank having filed 557 foreclosure suits in 2007, tops the list of banks having filed such law suits in Summit County; and this when the bank does not even have presence in this county. The other banks making it to the top five suit filers are Wells Fargo, U.S Bank, CitiMortgage and Bank of New York.

The reason being that many banks today “Bulk Buy” the loans from local lenders. Though the file list does not reveal the original lenders, it is a common practice that banks indulge in.

According to state Treasurer Richard Cordray, the local lenders are very careful when it comes to giving mortgage loans and many a time, once loans are made, they are immediately sold off to the larger national and foreign banks. Since, these banks offer attractive products coupled with aggressive marketing, the local lenders’ products are sidelined.

Many lenders, have no interest in these loans made and they are immediately sold off to the larger banks. Very often, Large banks suffer by purchasing many sub-prime and riskier mortgages.

Companies buying these loans already make necessary adjustments knowing that a percentage of such loans purchased will be termed “bad debts”, however this percentage has grown considerably because of the sluggish economy and variable interest rates.

Lenders make attractive initial offers with low but variable interest rates, which on long terms mortgages increase to a greater proportion and thus home owners cannot bear the cost of such high interests.

Fred Carr, an economic education professor at the University of Akron and director of the H. K. Barker Center for Economic Education says that such a situation could well have been avoided if people had opted for a “fixed” rate of interest. Though fixed rates are slightly higher than the offered variable rates, in the long run, remain unaffected by the fluctuations in the economy.

He states that since banks want to sell as many mortgage loans as they can, variable rate loans are pushed on the customers. Industry sources state that banks and lenders do not want to foreclose on properties as there are no gains left after the cases are settled. It is only an extreme measure which banks resort to.

Perhaps the slack economic situation is pushing banks to file suits in such large numbers. As the rate of defaulters is increasing, banks would like to salvage as much as they can.

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