|
No relief in sight in housing crisis
(News & Observer, The (Raleigh, NC) (KRT) Via Acquire Media NewsEdge) Jul. 13--As executive director of The Community Reinvestment Association of North Carolina, Peter Skillern has been working for regulatory changes to protect homebuyers from dubious lending practices. Skillern discussed the foreclosure crisis with staff writer Anne Blythe.
Q: Although the problem is nowhere near as monumental as in Florida, California, Nevada and Arizona, the Triangle has seen a jump in foreclosures this year. Is an end in sight?
A: Foreclosures locally and nationally will continue to increase in the region and across the country as the next wave of adjustable rate mortgages reset to higher levels. More borrowers will face higher mortgage payments and many will not be able to make ends meet. The hangover of a bad credit binge will take years to get over.
Q: Is enough being done at the federal level to help homeowners and future homeowners?
A: Not yet. The U.S. Treasury and industry response ... is primarily Hope Now, a voluntary effort for lenders to modify troubled loans. A very small percentage of loans are modified. Legislative reforms for foreclosures are needed to encourage lenders to modify loans and keep people in their homes. Yet, congressional action is pending. The Federal Housing Administration is seeking to refinance troubled loans, but it will be insufficient given its capacity and the growing tide of a conservative estimate of two to six million foreclosures from 2007 to 2012.
Q: What can be done locally?
A: We applaud the city of Durham's outreach and education effort to get people to seek credit counseling. More than half of borrowers don't contact their lenders when they're in trouble, and that's a pattern we have to change. Local governments should support nonprofits in purchasing and rehabbing foreclosed and vacant homes in neighborhoods that have been hardest hit.
Q: What incentive is there for a lender to work with someone facing foreclosure?
A: It is cheaper for a lender to modify a loan than it is to foreclose. But modifications are rare because private mortgage insurance doesn't cover losses for modifications, only foreclosures. Often, second mortgages ... are a barrier, and investors in the mortgage-backed securities that ultimately own the loan won't negotiate.
Q: Is there anything in history similar to this foreclosure crisis?
A: The Great Depression.
Q: Are there any positive effects of the crisis?
A: A silver lining on the horizon may appear that predatory lending practices are prohibited, the federal regulatory structure is modernized and lenders get back to the basics of making loans borrowers can repay. That the mortgage sector has to change is clear; what the final reforms look like is not.
Q: What do you think of the state's response to the crisis?
A: The General Assembly has passed model anti-predatory lending laws and expanded the foreclosure-prevention program statewide to provide counseling and refinancing for some in foreclosure. The N.C. Banking Commissioner has enforced state laws. The problem is that most mortgage lending operates under federal, not state law.
Q: Should anyone facing foreclosure expect help from federal regulations due out this week?
A: No. The new rules will help prevent this type of mess in the future.
To see more of The News & Observer, or to subscribe to the newspaper, go to http://www.newsobserver.com.
Copyright (c) 2008, The News & Observer, Raleigh, N.C.
Distributed by McClatchy-Tribune Information Services.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
[ Back To TMCnet.com's Homepage ]
|
Find Solutions for Enterprises, SMBs & Service Providers at the INTERNET TELEPHONY Conference and EXPO West, September 16-18, 2008. Los Angeles, California.
