Making Home Affordable?

A new study out from the Federal Reserve Bank of Boston concluded that “lenders expect to recover more from foreclosure than from a modified loan”.

The reason?  Only about 30% of homeowners that fall behind on their mortgage payments are able to start paying again without lender intervention.  When loans are modified, 30% to 45% of homeowners still miss payments within the first 6 months… primarily because loan modification does not reduce the principal of the loan.

Economist now consider unemployment to be a more prominent cause of mortgage delinquency than sub-prime mortgages.   It is difficult to make mortgage payments without income.

The Truth in Lending Act is offering some homeowners a chance to keep their home.

The Truth in Lending Act (TILA) of 1968 is a U.S. Federal law designed to protect consumers during credit transactions by requiring clear disclosure of lending terms, well defined lending arrangement and disclosure of all costs.  The statute is contained in Title 1 of the Consumer Protection Act.  Homeowners can investigate whether their mortgages violate TILA, which could invalidate the loan.  This is possible for less than a quarter of the mortgages currently in delinquency.  The Truth in Lending Act has a 3 year statute of limitations and the lengthy, sometimes costly process causes most to abandon the effort.

Related posts:

1. Making Home Affordable
2. Lenders Resist Making Home Affordable
3. Pending Home Sales Drop, Market Looks Bleak
4. Report: HAMP Program Only Making A Dent In Foreclosure Crisis
5. Existing Home Sales Decline

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