Foreclosures: Fast road to more problems or a way to stabilize the housing market?
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Why not let foreclosures run their course so the home market can reset to a sustainable level -- a sentiment often expressed on L.A. Land comment boards -- was among questions asked of Shaun Donovan, secretary of the Housing and Urban Development Department, Thursday at the National Assn. of Real Estate Editors conference in Washington. His keynote address came on the heels of President Obama’s announcement of major changes in rules governing financial institutions.
‘Foreclosures were a part of the problem,’ Donovan said, ‘rather than a path to a solution.’
Taking no action and allowing more foreclosures to occur ‘wasn’t going to lead to a bottom but to a much more substantial decline,’ he said.
Programs underway to help homeowners who are not yet in arrears refinance their loans or to modify the loans of borrowers who are in default are just part of the government’s plans to stabilize the housing market. Also in the works as part of the president’s overhaul plans are simpler loan terms, requiring originators to keep a 5% stake in their mortgages and increased efforts to stop fraud, he said.
The HUD secretary acknowledged government efforts have their limits.
‘Clearly some families are in homes they can’t afford,’ Donovan said. ‘We can’t stop every foreclosure.’
OK, L.A. Land you heard the man. Opinions?
--Lauren Beale, reporting from Washington
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