Why White House Plan offers little foreclosure relief?

By John W. Schoen

Senior Producer

MSNBC

updated 2:51 p.m. ET, Mon., March. 31, 2008

The broad regulatory changes proposed by the White House Monday add to an ongoing debate in Washington about what is needed to clean up the mess created by Wall Street’s failure to manage its own risky investments — and keep it from happening again.

With millions of homeowners at risk of losing their homes, Democrats have focused on heading off an expected rise in mortgage defaults — and the resulting losses to investors who bought bonds backed by those now-shaky mortgages. Republicans tend to favor a series of regulatory reforms to streamline the current alphabet soup of agencies created during the Great Depression to rebuild the American dream of homeownership.

Regardless of which approach the government ultimately takes, the most important question is: Can the government can act quickly enough to keep the current credit crunch from spreading? That part of the story is still being written.

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Stocks Fall due to Weak Housing Market

I was reading today that stocks dropped significantly lower due to a weak residential housing market. Companies like USG which is one of the biggest building-materials provider is down by more than 4% and said that their quarterly net income have plunged to to $56 million from $176 million a year earlier, and warned it expected the housing downturn will be a "multiyear" event.

Is this the end of the property boom? Who knows. But certainly there are more foreclosure listings lately.

U.S. Foreclosure Filings Jump to Record in First Half

I was reading Bloomberg news today and according to Dan Levy and Brian Louis, "Mortgage foreclosures in the U.S. jumped to a record in the first half as rising interest rates and falling home prices battered homeowners.

Almost 926,000 foreclosure notices were filed, 56 percent more than a year earlier and the most since Irvine, California- based RealtyTrac started tracking the data in 2005. Foreclosures were the highest last month in California and Florida, where some home prices have fallen as much as 25 percent, and Ohio and Michigan, where the automotive industry fired more than 50,000 people in the past 10 years.

The jump in 30-year mortgage rates by more than a half a percentage point since May is putting a crimp on borrowers with the best credit just as a crackdown in subprime lending standards limits the pool of qualified buyers. Foreclosures also are increasing as the supply of unsold homes hit a record 4.43 million in May, according to the National Association of Realtors.

Foreclosure rates in ``most states remained substantially above last year's levels,'' RealtyTrac Chief Executive Officer James Saccacio said in a statement.

In June, defaults surged 87 percent to..." To read the rest of the article, please click here.

How to Avoid Foreclosure

Would you like to find out how you can avoid foreclosure?

Here is one way on how to do it.

One of the common problems that a lot of people share is not having enough money due to job loss, divorce, bankruptcy, illness, and changing economic conditions.

If you do own a home, be aware that if you are more than three payments behind in your mortgage payments, your lender or bank has probably already started foreclosure proceedings against you. In most cases when a home owner is in financial distress and behind their mortgage payment, the mortgage lender becomes Public Enemy Number One - their phone calls are avoided, their letters are unopened, and their attempts at communication are avoided at all costs.

This is one tip you should avoid. This approach is opposite from the one you should take - open communication.

At the first sign of financial distress, the first thing you need to do is to contact your lender. Do not be afraid of this conversation - there is more danger in silence than in regular, open communication with your mortgage company. Although you may anticipate your lender is working against you, please remember that the lending partner benefits most by the consistent payment of your mortgage than by taking your property, so their primary goal is to get you back on track.

Be open and honest about your situation. The lender wants to know whether your financial difficulties are temporary or long term - this gives them an understanding of whether to provide a short-term change in your payment total or to pursue another way of obtaining their money.

It is important to get all the correct phone numbers, fax numbers, and addresses of your lenders. All communication MUST be documented - it is in your best interest to create a paper trail of evidence that proves you are attempting to resolve the situation. After speaking with your lending partner, ask for documentation that summarizes your conversation or agreement, and keep these letters in your files.

Also, it is absolutely essential that you communicate with the right person. Speak only to an individual who is authorized to enter into and approve a workout agreement.

It pays to communicate. If there is a change in your circumstances, and you cannot honor your agreement, contact your lender immediately.

If you think that your situation is going to be long term, it would be useless and in bad faith to negotiate a delinquency cure. It is better to keep your integrity than putting yourself deeper into debt. If you cannot afford your house, DO NOT KEEP IT. The stress of attempting to keep up with payments is stressful and detrimental to your personal life.