The U.S. Department of Housing and Urban Development will shut down the FHA Secure Refinance program at the end of this year. The program, which was supposed to help 240,000 sub-prime borrowers to refinance into fixed rate FHA loans, fell just a little short of its foreclosure prevention goal.
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Has the loss mitigation industry failed the homeowner who’s trying to prevent foreclosure? There was an excellent article in the Wall Street Journal on a related topic: Some Consumers Say Wall Street Failed Them. It talks about how the burden of risk and responsibility has been shifted to the consumer, while Wall Street manages to make (take) money at every turn.
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HUD Secretary Steve Preston spoke in front of the National Press Club on Wednesday regarding the current mortgage crisis, and HUD’s role in foreclosure prevention. I saw a re-broadcast on C-Span.
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It used to be, way back in 2005, that if you were working with a borrower who was behind on payments, you smiled when you learned that it was an FHA loan, because you knew that HUD foreclosure prevention programs were solid and reliable.
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Congressman Barney Frank and Representative Maxine Waters sent a letter to President Bush, urging him to place FDIC Chair Sheila Bair in charge of foreclosure prevention on mortgages acquired through the recently passed $700 billion legislation. You know, the one where the federal government was going to buy distressed mortgages? Never mind that they’ve already spent half of the money injecting capital into banks and NOT buying mortgages.
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In some ways, the interests of the mortgage insurance companies are more closely tied to homeowners who are trying to prevent foreclosure than anyone else involved in the foreclosure process. Housing Wire recently reported that Genworth Financial is expanding its pre-purchase education efforts to inform borrowers about their options if they fall behind on payments and need to prevent foreclosure.
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In July, I posed the question, “Will Mortgage Companies Take Advantage of the Foreclosure Bill?” With several logistical obstacles just off the top of my head, I predicted that there was no way that lenders were going to be able to handle Foreclosure Prevention Act mandates.
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Yet another attorney general claims that lenders are not doing enough to prevent foreclosure for homeowners. Illinois Attorney General Lisa Madigan and 11 others are asking mortgage companies to do more to help homeowners keep their homes.
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California Governor Arnold Schwarzenegger signed 10 bills designed to prevent foreclosure by reining in the mortgage industry. The one bill that he did veto was designed to create a “fiduciary duty” for mortgage brokers to borrowers.
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