New Jersey Governor Jon Corzine today called for a three-to-six month foreclosure moratorium to give borrowers more time to modify their existing mortgages.
While speaking at a housing conference hosted by the Office of Thrift Supervision in Washington, Corzine also pleaded that TARP funds “absolutely” be used for loan modifications.
His sentiment supports a recent plan put forth by FDIC head Sheila Bair, calling for $24.4 billion of the $700 billion bailout fund to be used to guarantee new loan modifications.
However, a forthcoming report from the Office of the Comptroller of the Currency is expected to reveal that most of the loan workouts previously completed fell back into default within six months.
Preliminary details show more than half of the loans modified in the first quarter of the year have already re-defaulted, according to OCC head John Dugan, raising serious questions regarding the efficacy of workouts.
So if the loan workouts aren’t getting the job done, what about lower rates? Well, unfortunately, those most in need of a refinance probably can’t obtain one because of their negative equity positions.
And even those with equity in their homes may not have enough to meet the new tighter guidelines extended by lenders these days.
Back in October, a new bill called the New Jersey Home Ownership Prevention Act was approved by the state’s budget committee, which if passed by the full assembly, would require lenders pay $2,000 to the state before foreclosing on a property.
But these measures look only to be delaying a growing problem, which if not properly addressed, could land us in a lot more trouble for a lot longer.
(photo: iboydaniel)
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