Government considering proposed solutions to high mortgage foreclosure rates

The U.S. housing market is in desperate straits due to the phenomenally-high rate of sub prime mortgage foreclosures. This severely threatens homeowners and lenders and can negatively influence new construction as well as home values. As a result, policy makers are being strongly urged to consider solutions that include:

* Strengthening programs designed specifically to provide homeowner’s with help while their mortgages are in re-negotiation and to ptotect their creditworthiness if the property is sold so that owning a new home in the future is still possible.

· Providing federal grants that would enlarge and enhance mortgage foreclosure prevention and assistance to enable homeowners to secure low-interest mortgage funds if they are eligible for them.

· Generating federal monies aimed at key states and cities where the mass foreclosure rates are the highest. Right now, there are more than 2.2 million families that may lose their homes due to sub prime mortgage foreclosures that will also result in the loss of as much as $164 billion in accumulated wealth.

· Assuring that federal agencies make a complete re-assessment of the effectiveness of new programs at least every three years.

These programs will go a long way toward resolving the current mortgage foreclosure crisis nationwide. There were 1.2 million home foreclosures in 2006 which represented a 42 % increase over 2005. Twenty percent of these boprrowers who faced foreclosure did so as a result of predatory mortgage terms and the necessity for multiple refinances. Ironically, 20 percent of these sub prime mortgages were given to homewoners who had sufficiently-high credit scores to qualify for lower-cost conventional mortgages.

It is also interesting to see that more than 17% of such rural loans were high annual percentage rate (APR) mortgages that exceeded the national average of 15.5%. Moreover, sixty-three percent of sub prime mortgage loans imposed a prepayment penalty after just two years of the mortgage’s life.

There is little doubt that some form of federal and/or state financial intervention is necessary to slow the current foreclosure rate all over America. Millions are still facing the hard facts of foreclosure due to having sub-prime, high APR adjustable rate mortgages (ARM) that they just cannot make the payments on. Those affected most are low income people as well as Hispanic and Black Americans and experts predict that if the federal government doesn’t take steps to ease this situation in the short term, more and more nationwide homeowners will end up in a severe crisis situation.

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