Avoiding Bankruptcy: Working for a Home Foreclosure Moratorium
As tax season comes and goes, the most recent statistics still show that although some numbers in certain areas of home foreclosures and bankruptcies are going down, the epidemic is still one that is holding America’s most vulnerable hostage by where it matters most: their homes.
According to a recent article by CNN.com, a group of housing activists are lobbying lawmakers in Washington, D.C., hoping that changes can be made to current laws that will allow those facing serious financial crunches an opportunity to keep their home while working out their personal economic crisis and questionable home mortgages.
CNN.com said: “Housing activists say most families with high-risk mortgages whose terms are questionable should not be kicked out of their homes when they are delinquent on payments. A coalition of groups urged lenders to adopt a six-month moratorium on foreclosures to provide time to work something out.”
The problem of personal debt is reaching epic proportions, and the desperation of borrowers is only being multiplied by misleading lenders who are in the business of taking advantage of people through home loans that are loaded with pop-up terms that are more expensive than people realize.
“The problem hits the sub-prime mortgage market, where people pay more for their home loans because the prime market considers them to be higher risks than other borrowers. Activists said in a news conference, lenders are misleading many borrowers, who are surprised and unable to pay when expensive terms of the loan kick in.”
Josh Nassar, of the Center for Responsible Lending, told reporters at the press conference: “People are qualified generally just to pay for the initial rate, not the adjusted rate, which includes a payment shock of well over 30 percent.”
CNN reported the Center for Responsible Learning estimates that about 20 percent of the sub-prime loans made in the past two years will go into default and result in families losing their houses.
Many reasons are cited for how a borrower could go into default on a loan (if you’ve been keeping up with Bankruptcy INK you know there are articles that break down tips to look at when working on a loan with a mortgage broker), but sup-prime loans, in particular, were initially developed for people having trouble qualifying for a home loan. Which is all-good, but unscrupulous lenders have teamed with real estate agents to place people in contracts beyond their means,
Certain ethnic groups seem to be even more at-risk for being take advantage of, including Latinos and African-Americans.
According to CNN, a six-month moratorium to keep people in their homes while questionable loans are investigated and worked out would be ideal, but members of the coalition, which also includes the NAACP, acknowledged no lenders have committed to a moratorium on foreclosures. But, activists did vow to pressure the industry to throw out questionable mortgages in favor of repayment terms that homeowners can sustain.