California to Help Homeowners
Of all the states, California is being impacted the most by the recent housing foreclosure crisis. California Governor Arnold Schwarznegger has been working with lenders from Countrywide, GMAC, Litton, and HomeEq to reach an agreement to streamline what is being called “fast-track” procedures to assist those sub-prime borrowers who are at risk of losing their homes. The four companies mentioned above service more than 25 percent of issued sub-prime mortgage loans.
”With this type of cooperation from loan servicers, we can save tens of thousands of people from being added to the foreclosure lists. This common-sense approach does not involve a government subsidy or bailout,” said Governer Schwarznegger. “Borrowers need to do their part too. If these lenders are willing to meet more than halfway, it’s important that consumers don’t run when they reach out. It was a two-way street that got us into this mess and it will be a two-way street that gets us out.”
The manner in which this agreement was reached and based on came from a proposal set forth by Federal Deposit Insurance Corporation Chairperson Sheila Bair. In her proposal she suggested that lending agencies keep sub-prime mortgages at their initial interest rate as long as the borrowers were living in th ehome and making payments. It would only include those who cannot affort the new payments once the reset interest begins.
Nearly one-half million Californians already have sub-prime loans that will increase to higher rates within the next two years. Without some kind of financial assistance the foreclosure rate for those individuals would be very high.
In addition to the above proposal, Gov. Schwarznegger also announced more help and assistance that will come from the state in order to assist those who may be facing foreclosure now and in the future.