With 2007 home foreclosures being reported as dramatically higher than 2006, many are scrambling to find solutions that will help fix the mortgage crisis and the economy. A tax rebate is all very well, but what about those who are struggling right now to pay their mortgages? The economy won't recover very well with foreclosures left and right.
The Center for Responsible Lending has its own ideas of what can be done. Citing the very limited impact of measures put into place so far, in terms of how many of the possible 3.5 million foreclosures through 2009 can be prevented, the Center offers this advice:
According to Eric Stein, senior vice president of the Center, "The most effective policy for significantly reducing foreclosures would be permitting court-supervised modifications of distressed mortgages—but homeowners are specifically excluded from such relief under current bankruptcy law. Legislation to remove this barrier is now moving through both the House and the Senate. Congress has the power to prevent 600,000 homes from being lost to foreclosure, at no cost to the national Treasury," said Stein. "We urge Congress to pass this necessary legislation, both for homeowners and the nation's economy."
Would it work? It might. So far mortgage lenders are reluctant to voluntarily renegotiate mortgage interest rates with at-risk borrowers. But being able to have the court force them to renegotiate may bring out more willingness to work with borrowers in order to prevent foreclosure.
And don't forget that the Senate still has to decide whether to approve an increase in the conforming loan limit. That may help mortgage borrowers by allowing theto more easily sell their homes in order to avoid foreclosure.
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