Obama Administration Sketching Plans for Preventing Foreclosures

While the Obama administration is sketching plans for preventing foreclosures the jumbo players in the game, the lenders, are putting on hold foreclosures. They are biding their time – waiting and watching for the next move.

The White House announced on Wednesday 12th February that it would give a sketch of the much-awaited plans of Obama to spend a minimum of $50 billion to plug the foreclosure tide. He would be talking about it in Arizona – one of the worst hit states.

Robert Gibbs the press secretary of White House said, “It’s not intended to be measured by one day’s market scorekeeping, but instead to ensure that the 10,000 Americans each day that have their homes foreclosed on, and the millions more that are barely getting by, are protected.”

Tim Geithner, the Treasury Secretary had talked about a renewed effort to bring stability to the financial system. He outlined the efforts that were to be made to give relief to the foreclosure victims but no details were forthcoming.

Lately the lenders have put in more effort to help the borrowers but so far their efforts have not shown the desired results and the recession continues to plague the country – the worst in many decades.

In 2008 over 2.3 million homeowners were foreclosed upon – it marking 81% spike over 2007. Pundits opine that the number could go up to 10 million during the forthcoming years. Everything depends upon the intensity of the recession.

Last Friday, the jumbo mortgage companies, now under the control of the government, Fannie Mae and Freddie Mac together with important banks like Bank of America, JPMorgan Chase, Morgan Stanley and few others announced that would put on hold foreclosures till 6th March 2009. Citigroup decided to extend the moratorium till 12th March – this being the expansion of a step it had started from last November. The moratorium applies to those houses that are occupied by owners and not to those belonging to investors.

Fannie Mae said that the suspension applied to foreclosure sales as well as evictions on properties that were occupied. Freddie Mac said that this would be applicable to properties up to a limit of 4 units but not to any vacant properties. During the last festive season in winter both Fannie Mae and Freddie Mac had suspended foreclosure activity till 9th January. Together both these companies own or hold nearly half of all the mortgages in USA.