Many US home repossessions inevitable

WASHINGTON – Faced with record-high home repossession rates, the Bush administration has been scrambling to keep people from losing their dwellings, but many are beyond help, Treasury Secretary Henry Paulson said this week.

Lax lending standards that accompanied the once high-flying housing market allowed people to buy homes they could not afford, Paulson said. “Many of today’s unusually high number of foreclosures are not preventable,” he said in prepared remarks to a mortgage-lending forum meeting in Arlington, Virginia.”There is little public policy makers can, or should, do to compensate for untenable financial decisions.”Paulson said that there were 1.5 million home repossessions started in 2007.He said some economists estimate there will be about 2.5 million foreclosures started this year.Since last summer, the Bush administration has been focused on cutting down on the number of what Paulson called preventable foreclosures, where struggling home owners want to keep their homes and have the financial wherewithal to do so.The administration has been working with the Hope Now alliance, an industry group trying to coordinate a response to the mortgage crisis, to encourage lenders to work out loan modifications or refinancings for people who can afford the new terms and can keep making payments.”While there have been bumps in the road and there is still work to do, the industry, through Hope Now, has made an enormous effort and great progress toward meeting these challenges,” Paulson said.Since last July, the industry has helped 1,7 million home owners with loan workouts that allowed them to stay in their homes, Paulson said.Slumping home values are blamed for the bulk of the increasing repossessions.Troubled borrowers left owing more to the bank than their homes are worth are walking away.Dumping more empty houses on the market adds to the pile of unsold homes, and that drives home prices down further.Other homeowners were clobbered when initially low mortgage rates reset to much higher levels, ballooning their monthly payments.Congress is working on legislation that would permit the Federal Housing Administration to provide new, cheaper mortgages to distressed home owners who otherwise would have difficulty refinancing into more secure government-insured loans.Lenders would have to be willing to take a substantial loss by reducing the amount owed on the loan.Nampa-AP”Many of today’s unusually high number of foreclosures are not preventable,” he said in prepared remarks to a mortgage-lending forum meeting in Arlington, Virginia.”There is little public policy makers can, or should, do to compensate for untenable financial decisions.”Paulson said that there were 1.5 million home repossessions started in 2007.He said some economists estimate there will be about 2.5 million foreclosures started this year.Since last summer, the Bush administration has been focused on cutting down on the number of what Paulson called preventable foreclosures, where struggling home owners want to keep their homes and have the financial wherewithal to do so.The administration has been working with the Hope Now alliance, an industry group trying to coordinate a response to the mortgage crisis, to encourage lenders to work out loan modifications or refinancings for people who can afford the new terms and can keep making payments.”While there have been bumps in the road and there is still work to do, the industry, through Hope Now, has made an enormous effort and great progress toward meeting these challenges,” Paulson said.Since last July, the industry has helped 1,7 million home owners with loan workouts that allowed them to stay in their homes, Paulson said.Slumping home values are blamed for the bulk of the increasing repossessions.Troubled borrowers left owing more to the bank than their homes are worth are walking away.Dumping more empty houses on the market adds to the pile of unsold homes, and that drives home prices down further.Other homeowners were clobbered when initially low mortgage rates reset to much higher levels, ballooning their monthly payments.Congress is working on legislation that would permit the Federal Housing Administration to provide new, cheaper mortgages to distressed home owners who otherwise would have difficulty refinancing into more secure government-insured loans.Lenders would have to be willing to take a substantial loss by reducing the amount owed on the loan.Nampa-AP