Some banks, like Citibank, intend to work hand in hand with borrowers to settle on a mortgage borrowers can handle--Citibank has also vowed not to start foreclosure proceedings on anyone who has enough income to handle a reasonable mortgage. Statistical evidence seems to show that these attempts are working--drops in foreclosures are seen in CA. Even so, foreclosures in the last two years are unprecedented, and foreclosures are always bad news for the economy--they serve to bring down housing values, therefore spawning more foreclosures.
The plan behind the program is to quicken the pace on the mortgage modification process so that mortgages become more affordable soon enough to save some people in critical danger of foreclosing. The plan also solidifies loan modification rules, and many companies have added staff to help handle the surge of cries for help.
But the question still remains--will modified mortgages be low enough that people will be able to make their payments? Many people are doubtful that the new plan will actually be able to help them. Plus, a borrower can't get help until they're past due, even if they're having trouble keeping their head above water. Some people fear the banks encourage people to get past due before throwing them a lifesaver.
Check out the full text article of this story in Mercury News, called Sweeping Mortgage Aid Plan Unveiled. It's written by Pete Carey and contains loads more details about the new plan and what it means for borrowers.
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