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With the continuing rise of foreclosures sweeping across the country, the federal government has decided to use billions of taxpayer’s money in prevention programs against foreclosures. This includes the FHASecure and Hope for Homeowners programs, which guarantees the refinancing of expensive mortgages that brought these homeowners into trouble and convert them into more affordable loans.

The federal government is also funding the mortgage modification programs for loans facing foreclosures that are owned by mortgage giants Fannie Mae and Freddie Mac. Several sectors are also pushing for the use of a portion of the $700 billion Troubled Assets Relief Program to directly bail out troubled homeowners from foreclosures.

These program, although design to help people avoid foreclosures, only infuriated several taxpayers, particularly those who did not go with the wave during the home buying spree when Adjustable Rate Mortgages were offered a few years back. They feel no remorse for people who were not careful to spend beyond their means and now are in trouble because of their bad decisions.

Other taxpayers are also losing their jobs due to the economic problems they believed were caused by these people who made the wrong decision in taking on mortgages, which they could not possibly pay. Now that these people who made the wrong decisions are facing foreclosures, taxpayers are furious that the government would spend billions to help these people, while those who did not cause the problem are receiving zero dollars.

On the other hand, experts are explaining the need for the government to bail out homeowners in mortgage trouble. As the number of foreclosed properties grew astronomical, home values are affected severely and these sharp declines in prices will continue to cripple the economy. Letting delinquencies slide much further will only create more damage on a national level and will affect the entire financial system.

Although it seems unfair for others, supporting these bailout programs will be beneficial for the nation as a whole and everyone will eventually benefit from it.

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For the first time since his election, President-elect Obama criticized the current administration for its lack of effective actions and countermeasures in stopping the flood of foreclosures that is hitting the nation.

Disappointed on the slow action of the administration in coming up with a favorable package that will not only help homeowners in danger of foreclosures, but would also be beneficial for the whole nation. If no apparent action can be established until January 20, 2009 when he takes office, Obama promises to take sufficient and immediate steps to stem this tide of foreclosures.

The Bush administration reacted by pointing out programs to address the issues on foreclosures that are handled through the efforts of the Federal Housing Authority in collaboration with the private and banking sectors. Admitting that there are no definite solutions to the problem, administration officials on the other hand highlighted the aggressive steps in dealing with the housing issues by strengthening both Fannie Mae and Freddie Mac in a bid to curtail the impact of foreclosures and salvage workable mortgages. Additional programs and options are also ongoing study in an effort to keep families in their homes.

President-elect Obama disclosed that his economic team is contemplating the merits of a 90-day moratorium so homeowners can work out and renegotiate with their banks and lenders on how to restructure their loans to make payments affordable and sustainable. Obama pointed out the efforts of struggling Americans who are sacrificing everything just to make their monthly payments, avoid foreclosures, and stay at their homes.

Obama described the stimulus package being drawn by his economic team as vital to the recovery of the economy, stop foreclosures, save the auto industry and put Wall Street back to top form. According to Obama, the economic recovery plan does not involve simple dole outs of federal money but would involve a radical change in how the country does business that would benefit the whole economy.

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More and more Chinese are joining tour groups especially organized for house-hunting and home-buying in the U.S. to take advantage of the bargain prices of foreclosed properties. The Chinese government has relaxed its U.S. visa and foreign investment regulations to enable its people to buy real properties abroad.

Among the most popular destinations are Los Angeles, San Francisco and Las Vegas, the cities with the highest foreclosure rates. According to Jamie Lee of the Los Angeles Convention & Visitors Bureau in Beijing, Chinese investors have been buying properties quietly in Southern California for years. Now they are going around buying repo homes in large groups.

Meanwhile, even Chinese local governments have become involved in the buying spree. Government officials from the southern province of Guangdong are scheduled to fly to Los Angeles to establish a regional office to assist residents of Guangdong in their home-buying efforts.

Ling Chow, head of the Chinese American Real Estate Professionals Association in Southern California’s San Gabriel Valley, is pleased about the surge of home buyers from China. But he doubts about their impact on the revival of the housing market which is filled with foreclosure properties.

Chow said that many of the Chinese buyers are looking for new homes in school districts with high academic ratings in preparation for their children who are set to immigrate with them. Some are buying for their children who are attending college in a few years.

Nevertheless, researcher Mei Xinyu of the Chinese Ministry of Commerce is concerned about groups of Chinese investing in new homes and foreclosed properties in markets they know nothing about. He warned about communities that may not recover at all.

As a response to concerns similar to Mei Xinyu’s, Yuan Lixin of newspaper publisher and group tour organizer Beijing Youth arranged group tours to give Chinese tourists and potential home investors a feel of the real American life in communities hit hard by foreclosures.

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Bank officials in the country announced their stand on the funds of the bailout program by the US government.

Banking officials, in an attempt to assure lawmakers, said that the $700 billion bailout fund for the financial industry will be used to help delinquent borrowers avoid foreclosures. They made the statement to quell down news that, instead of using the funds on programs that could decrease the number of foreclosure properties, lenders will use the funds as payments for expenditures.

JP Morgan’s Chief Risk Officer Barry Zubrow assured the Senate Banking Committee that their lending company will be using the funds to help rewrite their terms of mortgages. Zubrow also said that part of the $25 billion capital infusion that JP Morgan received from the Treasury will be used in the promotion of loans. He said that the lending company is also finding ways to help its borrowers prevent foreclosures.

Along with other executives from Bank of America, Goldman Sachs Group, Wells Fargo, Zubrow told the Senate committee that none of the $75 billion fund that they have collectively received from the Treasury will be used for paying salaries, bonuses and other company expenditures. In the same light, Regional Banking President of Wells Fargo, Jon Campbell, said that their company does not need funds from the government to pay their operation expenditures. He also stressed that the company will cooperate with the government for programs to stop foreclosures.

After the company executives gave assurance that the funds they received will be used to help in the plan to decrease foreclosure properties, lawmakers still stood firm on their ground. Senator Chris Dodd, chairman of the committee, emphasized that hoarding of capital and acquisition of banks are not the reason behind Congress’ approval of the $700 billion funding.

Senator Charles Schumer said that he and other senators are considering options to require banks to grant more loans. He also mentioned that Congress can still halt the release of the second $350 billion funding if the situation will call for it. All these proposed steps are in line with the government’s aim to stop the growing number of foreclosure homes to help the housing industry.

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Governor Arnold Schwarzenegger announced that he will call a special assembly of the state legislature to facilitate the approval of measures that would stem the tide of foreclosure properties.

The governor reiterated that helping Californians keep their homes is of utmost importance to the state and that the only way to achieve that is to revitalize the economy. He explained that preventing foreclosures will hold back the rapid decline of house prices, provide the needed funds to assist troubled homeowners, save jobs and help stimulate the economy.

Among the central elements of Mr. Schwarzenegger’s package of proposals are:

• A loan restructuring framework that would reduce the mortgage loan to 38 percent of the total income of the household, giving homeowners the ability to pay with less difficulty.
• A 90-day suspension of foreclosure procedures for homes that have been served with notices of default.
• An option for lenders to opt out of the 90-day foreclosure suspension if they can show government authorities that they have better loan revision alternatives. Better alternatives would mean that the borrowers are not forced out of their homes, that property investors are rewarded with better returns and that homes do not simply become repo homes and sold at bargain prices.

Mortgage lenders will be advised to achieve the 38% loan-income ratio by lowering the interest rates for at least five years, by increasing the number of amortization years to 40 years and by deferring a percentage of the remaining principal to the last years of the loan period to provide the borrower with some flexibility for further refinancing or property sale.

Schwarzenegger also readied proposals to prevent the occurrence of another mortgage disaster. Among them are the following:

• Lending procedures and strategies will be modified so that borrowers will only be provided with loan levels that they can afford to repay and so that mortgage lenders and brokers will be deterred from making deceptive statements.
• Licensing prerequisites for loan processors will be standardized.
• Federal financial regulations will be enforced by state financial regulatory agencies.

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Almost every local government in the country has been busy with finding ways to help distressed homeowners stay in their homes and avoid foreclosure. Lately, it is not only this matter that the Washington’s Attorney General Office is worried about, considering the rising number of homes entering some stage of foreclosure. In addition, they are also getting concerned about foreclosure scams.

Desperate to get out of foreclosure, many troubled borrowers ignore common sense and become victims to scam artists who falsely promise to help them with their mortgage problems in exchange for some money. In worse cases, these unscrupulous individuals manage to cheat the homeowners out of their equity or convince them to transfer ownership of the distressed property.

It would seem that these scammers browse local foreclosure listings for possible targets. For this reason, the Attorney General has finally decided to protect these troubled borrowers by using the same public listings and sending distressed homeowners warnings against these fake foreclosure-rescue operations.

About 14,000 letters will be sent to troubled borrowers this week by the Consumer Protection Division of the Attorney General’s Office. Aside from this, the county treasurers will be sending out these warnings, together with the foreclosure notices, to homeowners who failed to pay their property taxes, beginning September. The warnings will also be posted in county offices and official websites as well as in local newspapers and newsletters.

The AGO, which has already acted on complaints against businesses that prey on these unfortunate property owners, is determined to protect distressed homeowners from these illegitimate foreclosure rescue operations by making sure that its warning reaches the homeowner first.

For county officials, the said letter from the AGO will further strengthen the campaign against foreclosure-related scams. Homeowners facing foreclosure should also be cautious and wary when a suspicious individual suddenly appears on their doorsteps offering foreclosure help.

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