HUD & Treasury to help foreclosure market?
In 2009, foreclosure rates shattered records a the number of homes that received foreclosure notices hit 2.8 million, up 21% from 2008 and up 120% from 2007 according to RealtyTrac‘s recent foreclosure data. Foreclosures are clearly on the rise and various signs point to this trend continuing.
In response to what some call a foreclosure crisis, HUD (the Housing and Urban Development Department) vows to take action to speed up the resale of foreclosures by waiving a major FHA rule (that prohibits insuring a mortgage on a home owned by the seller for less than 90 days) from February 1, 2010 to February 1, 2011. HUD noted that they will keep a strict supervisory role in this process to avoid predatory practices.
“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” said FHA Commissioner David Stevens said in a Reuters report.
The Treasury Department pledged to step up efforts on their end as well to improve HAMP (the Home Affordable Modification Program) which analysts note is not working. Only 25% of those eligible for a modification have been helped, up 1% from November which some read as a move in the right direction while the Treasury realized it’s a tiny step that could be much greater.
“It’s marginal progress,” Washington, D.C.-based mortgage industry consultant Howard Glaser told Reuters. “It’s helping the borrowers who have received the modifications, but systemically, the program is insignificant,” added Glaser. “With the wave of foreclosures ahead, it’s kind of like fighting a forest fire with a squirt gun.”