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Obama Considers Change to Foreclosure Prevention Plan That Would Convert Homeowners to Renters

July 15, 2009

Obama Administration officials are considering a new tactic to reduce foreclosures and curb the damage to the housing market, Reuters reported July 14. According to an unnamed administration official, the Treasury Department is considering a program that would allow homeowners to continue to rent their properties, even if they are foreclosed. The goal would be to stabilize the market and prevent foreclosures from taking a toll on neighborhoods and individuals. A spokesperson for the Treasury Department said it was just one plan under consideration.

The administration's Making Home Affordable plan, which allows refinancing for some and loan modifications for others, has not been as successful as planned. For a variety of reasons, the plan has helped only about 131,000 homeowners, a fraction of the millions who could have benefited. Because the rental plan is not final, no details were available, but Reuters cited the work of an economist who proposed a similar plan two years ago and been in touch with the White House. Economist Dean Baker suggested that banks foreclose on and resell the troubled homes but allow occupants to remain, paying a rent determined by a bankruptcy judge.

As San Bernardino County loan modification lawyers, we work every day with Southern California homeowners who are trying to avoid foreclosure. Through that practice, we've seen firsthand that lenders aren't interested in modifying loans, even given the incentives provided by Making Home Affordable. This plan wouldn't save people facing foreclosure, but it would address many of the problems created by foreclosure, including eviction, the blight on neighborhoods that results and the consequent loss of property values. And by doing that, it could help to stabilize home prices, reducing the number of underwater homeowners and attracting new buyers to the struggling market -- key goals for government officials all along.

Howard Law LLP represents homeowners throughout California who need help persuading their mortgage lenders to seriously consider granting a loan modification. After months of representing homeowners in danger of default and foreclosure, we understand that lenders often have no intention of making loan modifications quick or effective, even though it's in their own financial interests to avoid yet another foreclosure. That's why our Los Angeles loan modification attorneys go through every client's paperwork carefully, looking for any evidence of predatory lending or other illegal activity that we can use as leverage in negotiations. We have successfully won changes to our clients' interest rates, repayment periods and even loan structures for adjustable-rate and other exotic loans.

If bureaucratic delays, mistakes and red tape are delaying your loan modification and you're at serious risk of foreclosure, the Chino loan modification attorneys at Howard Law can help. To learn more at a free, confidential consultation, please contact us online or call us toll-free at 1-800-872-5925.