Tags: Obama | Home | Foreclosures | Housing

Obama Considers Halting All Home Foreclosures

Friday, 26 Feb 2010 01:15 PM

By Frank McGuire

President Barack Obama reportedly is considering stopping all home foreclosures unless they have been rejected by the administration’s struggling $75 billion mortgage assistance program.

The move comes as Republicans take aim at Obama’s mortgage assistance program. Republicans argue the effort is making the economic crisis worse and say many homeowners would be better off as renters.

The president has been trying to convince investors and the general public that the country is slowly emerging from the recession, but the threat of foreclosures and a faltering housing recovery has been looming over the economy.

Meg Reilly, a Treasury Department spokeswoman, told Bloomberg that the proposed foreclosure ban was “one of the many ideas under consideration” in Obama’s attempt to stabilize the housing market.

“This proposal has not been approved and there are no immediate planned announcements on the issue,” she wrote in an e-mail. She confirmed the authenticity of the plan, which hasn’t been made public, Bloomberg reported.

Right now, lenders can initiate foreclosure proceedings on any loan that hasn’t been submitted for Home Affordable Modification Program, or HAMP, eligibility. Under current rules, foreclosure litigation can proceed while borrowers are under review for the program or even in a trial modification.

The proposed changes would prohibit lenders from initiating new foreclosure actions before loan screening by HAMP and would require lenders to halt existing proceedings for borrowers once they are in a trial repayment plan, Bloomberg reported.

Meanwhile, Reps. Darrell Issa, R-Calif. and Jim Jordan, R-Ohio., on Thursday called the program a misuse of taxpayer money, The Associated Press reported. Though $75 billion has been set aside for the program, so far only $15 million has been spent.

The lawmakers also said Obama's plan distorts the housing market by keeping people in their homes who would be better off going through foreclosure.

Homeowners who enroll in the program but then drop out "would have been better off if they had defaulted earlier and spent the payments on more affordable housing options," the two lawmakers wrote.

Obama administration officials, however, reject that argument. They say the program gives a second chance to homeowners who were given shoddy loans during the housing boom.

And they defend their track record, even though only 116,000 homeowners have completed the process out of the 1 million enrolled since the program's launch last March.

Earlier this week, Freddie Mac, which has lost a total of almost $80 billion since the housing crisis started in 2007, said a record 4 percent of its borrowers are at least three months behind on their payments and facing foreclosure.

Freddie Mac Chief Executive Charles Haldeman warned a "potential large wave of foreclosures" may sweep the nation.

The faltering housing recovery and threat of foreclosures are major problems for the federal government, which seized control of Freddie Mac and Fannie Mae in September 2008. The two companies have already siphoned $111 billion from the government to stay afloat. That number is expected to hit $188 billion by fall 2011.

Meanwhile, the Obama administration reportedly also is considering forcing lenders to make principal reductions to help struggling homeowners.

Asked about the possibility of using principal reductions on mortgages to stem the tide of foreclosures, Phyllis Caldwell, chief of the Treasury's Homeownership Preservation Office, said the department was open to the idea, Reuters reported.

"Our office has been aggressively considering proposals on all areas that we can do to address the foreclosure crisis in this country," Caldwell told lawmakers on the House Oversight and Government Reform Domestic Policy Subcommittee.

© 2015 Moneynews. All rights reserved.

Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
Zip Code:
Privacy: We never share your email.
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Davos Panelists Foresee the Death of Privacy

Monday, 26 Jan 2015 09:37 AM

Silicon Valley is in the process of developing appliances, systems, and controlling devices that are connected to one an . . .

Eastwood's 'American Sniper' Scores Big

Monday, 19 Jan 2015 08:36 AM

Eastwood’s 'Sniper' has picked up six Academy Award nominations, including Best Picture and Best Actor. With an estimate . . .

Golden Globes Officials Cope With Credibility Issues

Monday, 12 Jan 2015 12:46 PM

A problematic situation for the Golden Globes has been a lack of genuine credibility, despite the awards show’s substant . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved