New Proposals to help San Diego Homeowners.

New Proposals To Deal With Foreclosures- How It May Help All Owners.

On Capitol Hill, a new framework of legislation called The Preserving Homes And Communities Act  (http://www.thomas.gov/cgi-bin/query/z?c111:S.1731:)  is making progress. The bill’s intent is to assist homeowners who are facing foreclosure. Not by delaying an eventual foreclosure, but by forcing the mortgage note holder into a loan modification analysis. The end result may be a smaller mortgage payment that the homeowner can hopefully handle. Recent government reports show an unwillingness of the loan companies to get really engaged in workouts.

The legislation crafted  by Sen. Jack Reed, D-R.I., would require servicers to offer loan modifications to “qualified homeowners” if the net present value (the real value of the loan) of modifying a loan is greater than that of foreclosing. The bill would additionally establish a new mortgage payment assistance program and incentivize states and local governments to create foreclosure mediation programs.

“Voluntary efforts to keep families in their homes have failed,” says Sen. Dick Durbin, who earlier failed in his efforts to legislate court-ordered loan modifications.
A loan modification is a work-out designed to alter the terms of an existing mortgage to make it more affordable. But the catch has been that lenders are not required to approve homeowners for loan modifications nor are they required to even offer it. The Preserving Homes And Communities Act will change that.

The bill will prohibit mortgage holders from foreclosing on homeowners until they have had a discussion with them concerning their loan modification options and running some option scenarios. If a lender doesn’t comply with the Act then it could be hit with stiff fines and penalties. Many who are supporting the bill hope it facilitates modifications for those who are having tough times through no fault of their own, such as the recently unemployed.

But I am current with my mortgage, why should I care?

Even if you are current with your mortgage, or may not even have a mortgage, less foreclosures are better for the value of your home. As foreclosures rise, the pressure on lower values for ALL homes in the area rises. This is because the average sales prices of homes in your area is lowered, thus impacting your home’s value. Foreclosed homes sometimes add to blight and crime in the neighborhoods. A foreclosed home usually sits vacant for months while the resale process is in play, adding to an increased inventory.

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