New regulations have been proposed to help financially struggling families remain in their homes and reduce the number of Charlotte foreclosed homes for sale.
The North Carolina Office of the Commissioner of Banks has announced a proposal that would immediately stop foreclosures once troubled homeowners request for loan modifications. Currently, banks and mortgage lenders are simultaneously negotiating with homeowners who are seeking for loan modifications while pursuing foreclosure.
A proposed regulation also requires mortgage lenders to respond immediately to troubled homeowners when they request for assistance. If approved, the regulations would cover only mortgage lenders and brokers and exempted savings, loans and banks.
The proposed regulations are welcomed by industry experts who claimed that despite a significant decline in the number of foreclosure properties, the figures are still big enough to warrant more actions to prevent them from becoming an epidemic.
According to market data, a drop in the number of Charlotte foreclosed homes for sale was reported in August. About 76,134 distressed homeowners lost their properties to foreclosures for the month, representing a 12.7 percent drop from July.
Experts said that the drop could be attributed to the slow repossession activity of banks. It could also mean that the Obama Administration’s loan modification program has finally started to show some positive results.
They said that it is most probably that banks are delaying foreclosing on distressed properties. It is a known fact that banks incurred big losses when properties on their portfolio went into foreclosures. This could have influenced banks to delay foreclosure proceedings, thus allowing delinquent homeowners to still remain in their homes.
Experts explain that banks are into the financial business and do not want to become landlords. Furthermore, foreclosing on properties means homeowners would be forced to move out of the houses, leaving them vacant and no one to maintain them.
Delaying foreclosures means that banks have someone to care for the distressed properties, thus saving them the cost of maintenance.
However, the drop in foreclosure rate is not expected to last long as a flood of payment problems is expected soon as adjustable rate loans starts resetting. This problem is also compounded by record level unemployment rate.
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