Some Orderly Ways to Combat the Flow of Foreclosures
It is said that the current financial crisis in the United States started in housing industry. Although the financial crisis has been somehow abated, housing prices continue to drop and the number of foreclosed homes increases at an alarming rate.
The proposal to modify delinquent loans is expected to reduce foreclosure filings. However, this approach is not a sure fire way to stop foreclosures because many mortgages are not that easy to restructure and homeowners may not be able to afford mortgages that are acceptable to lenders.
Managing the influx of forfeited homes into the market is necessary to combat the declining prices of properties.
A concerted effort between local housing regulators and government agencies will come a long way to helping the housing market recover.
Addressing the problem in an organized way may hasten market recovery.
- The homeowner surrenders his deed to his property to the mortgage servicer. He will then rent the house back from the investor in an agreed period of time. The investor offers the renter a new mortgage deal at current market rates upon expiration of the lease agreement. If the renter fails to quality, the property will then be put on sale.
- After the property has been forfeited, the investor rents the house and use a part of the lease payment as equity should the renter decides to purchase the house after the expiration of the lease agreement.
- Established a regional clearinghouse with the main function of regulating foreclosed properties. The Treasury will coordinate efforts by agencies to regulate the influx of forfeited homes into the market, and thus control the depreciation of housing prices.
Investors can save more by avoiding foreclosure process and delaying sales. This would also give a chance for borrowers to redeem their properties and allow the housing market to stabilize.
Controlling the increase in the number of foreclosed properties plays a crucial role the economic and housing market recovery.