I don’t now if he’ll get it, but speaking today before members of the mortgage lending industry, Governor Corzine talked about freezing mortgage foreclosures:
New Jersey Gov. Jon Corzine on Monday called for a three-to-six month forclosure time-out, while government officials set up systems to help homeowners modify their mortgages. “We need a bottom up approach to modifying mortgages one home at a time,” Corzine told a gathering in Washington organized by the Office of Thrift Supervision. “It’s going to be messy but you got to get on the ground level.” Corzine said government officials should consider an approach similar to one put forward by Federal Deposit Insurance Corp. chairwoman Sheila Bair that would use $24.4 billion of a federal government $700 billion Troubled Asset Relief Program to modify loans.
He talked about the 1st bailout passed by Congress and how it’s not having an impact on the mortgage situation:
“The TARP plan is a piece of cloth concealing the most real and fundamental problem” of foreclosures, Corzine said at the Office of Thrift Supervision’s National Housing Forum.
The first $350 billion of the TARP has primarily been used to inject capital into banks’ balance sheets, but has failed to significantly increase lending to consumers, Corzine said.
Corzine said a better use of the funds would be a broad, systematic plan to modify troubled home loans and said the second half of the TARP should go to stabilizing the mortgage markets.
He also said the U.S. government should announce a time out on foreclosures and should return to pre-2005 bankruptcy rules.
Many other states have requested a break on foreclosures, but it appears Corzine is proposing a blanket program to help take some of the strain off of the system, but not everyone thinks this is a good idea:
HousingWire’s sources have consistently said a foreclosure moratorium alone is not enough to prevent foreclosures. Dustin Hobbs, a spokesman for the California Mortgage Bankers Association, called a blanket moratorium “a Band-Aid approach” that fails to address the situations and circumstances of each borrower and find a suitable solution. “The only way to stop a foreclosure is to modify the loan, and that has to take place between the servicer and the borrower,” Hobbs said in an interview. “So, as good as it sounds, [a blanket moratorium] really doesn’t have any teeth to it, as far as actually changing a borrower’s situation.”
We’re already on pace to hit 50,000 foreclosures this year in NJ alone and parts of the state like Ocean County are seeing 30 foreclosures per day. As of November, NJ was unfortunately in the top ten across the country helping lead the way:
New Jersey was ranked eighth nationally with a foreclosure filing rate of one out of every 410 homes, a nearly 75 percent increase from October 2007.
We were ranked 10th in May, so the trend is definitely going in the wrong direction. I’m not near smart enough to say I have the answers to this problem because it certainly wasn’t created overnight. I don’t think taking any one action will be a quick fix. This is going to take some time and pain, but we need serious discussions because the problem got worse as a result of people not seeing the risk before their eyes or not being willing to discuss what they saw in hopes it would just go away Now that risk has turned into a catastrophe and continuing to wait only does more harm. I know we need to find the right answers to the problem, but no answers or condemning the ideas that are suggested don’t advance a solution.
If you’re going through the economic ups and downs struggling with your home mortgage, tell us what you are experiencing.