Smart Lending Required To Bring Down the Foreclosure Rate

Posted on August 29th, 2007 by hinson

The towering foreclosure rate is becoming a cause of concern as it is on the verge of ruining a large number of households. The grave situation is calling for action. There is a need to ensure that the lenders follow some rules and regulations. In the draft report submitted by the Government, it was emphasized that there is a growing need for smart lending.

The task force engaged in the identification of the foreclosure activities taking place in Ohio laid stress on the fact that the borrowers must be aware of the pros and cons of opting for the sub prime mortgages that offer high degree of flexibility by adjusting the rates of interest. Also, it was mentioned that the lenders must take into consideration the credit history of the borrower while lending the loan amount.

The task force chosen by Gov. Ted Strickland is expected to adopt the strategies laid out to combat the foreclosure situation. Ohio stands at the third position next to California and Florida in the foreclosure listings. It had near about 44,594 foreclosed properties in the initial six months of the year 2007. A panel consisting of government as well as non government officials conducted extensive discussions on how to overcome the rising foreclosure activities that is badly hitting the economy of the nation.

From the beginning of 1999 onwards, Ohio has been witnessing a real high rate of foreclosure. The foreclosure activities in Ohio are greater than the average of the nation. The task force will call the mortgage lenders to modify the rates of interest and make then fixed rather than adjustable. Also the lenders will be asked to provide the borrowers with a minimum of 90 days notice before increasing the rate of interest on the total sum.

It is expected from the borrowers that they would act promptly on having received the notice of payment of the loan. The state must start a counseling program to help people in retaining the ownership of their homes. In most of the cases of foreclosure it has been noticed that people wake up by the time it’s too late to take an action.

Most of the people depend on the sub prime loans that are easily accessible. There is a need to harden the rules of lending and make the procurement of loans a bit tough. Lawmakers attempted to put some restrictions on the lending of loans which included the power of the borrower to file a suit against the lender who does not adhere to the rules and regulations laid down by the federal government. Very few homebuyers actually welcomed the consumer protection Act that was specially designed for their help. There is a need to bring about some reforms only then the foreclosure rate is likely to improve.

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