The House has brought a proposal to the forefront that would insure loans that lenders modified terms, including reducing the interest rates, postponing payments or extending payment arrangements. The proposal would utilize funds from the infamous
$700 Billion bailout to help main street and curtail the
foreclosure boom. Opponents warn of the moral dangers and potential for an increase in
foreclosures because many may seek lower payments offered through the loan modification proposal. The difficulty with this is a stipulation states the borrower must be 90 days late and with only a small percentage qualifying for a
loan modification this could cause a spike in
foreclosures.
Many states including Ohio have developed and or instituted modification options during the foreclosure process. Based on initial cases opting for modifications roughly 30% qualified for modification. Many have stated this number is exaggerated and point to numbers around 10%.
While loan modifications are an important part of the recovery process it is not a one size fits all for the
foreclosure crisis and legislation should be handled with kit gloves. ~ Joshua Host
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