Should homeowners facing the onslaught of foreclosures be optimistic at the news that Obama is contemplating a ban on foreclosures before lenders evaluate them for a loan modification?
So many questions are swirling around this new proposal. Some say it will only prolong the mortgage crisis and may not even be legal as it would invalidate mortgage contracts. Others say it will prevent mortgage holders from walking away from their homes, a decision many are making in light of the depressed value of real estate.
According to a Bloomberg news item released this afternoon:
— The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program.
The proposal, reviewed by lenders last week on a White House conference call, "prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed," according to a Treasury Department document outlining the plan.
She confirmed the authenticity of the document, which hasn’t been made public.
Clearly, this proposal may never become official policy, or be signed into law. Homeowners at the brink of landing on the courthouse steps, say next week or next month, may be left out in the cold before the policy takes effect. For many, it will be too little, too damn late. For others, it will be the rescue boat that saves them from drowning.