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Bankruptcy and Foreclosure

The main reason for homes going into foreclosure in the United States is the high unemployment rate. Homeowners who lose their jobs can’t pay their mortgages and, eventually, their homes go into foreclosure.

Subprime Loans

President Obama’s programs to deal with the foreclosure crisis in the United States were originally focused on individuals who had taken out subprime loans. It was originally thought that the subprime loan crisis was the primary cause of the high foreclosure rate in the United States. But there is a new villain in the real estate crisis – constant high unemployment rates in the United States.

Federal Programs Dealing With Unemployment and Foreclosure

The Obama Administration does have programs to help individuals who have lost their jobs delay mortgage payments. Unfortunately, the programs are designed to delay mortgage payments for a period of only two months. Since the average length of unemployment is now nine months, these programs don’t work. As of the present time, only about seventy-four homeowners have qualified for these programs.

Bank Bailout Program

The Bank Bailout Program undertaken by the Obama Administration provided $46 billion for the purpose of allowing homeowners whose homes have fallen into foreclosure to keep their homes. The Treasury Department has only spent $1.85 billion dollars to date. It is estimated that more than a million homes have gone into foreclosure because of insufficient assistance from the government for unemployed Americans.

An Obama Administration spokesperson has stated the problems with the programs to assist homeowners whose homes have fallen into foreclosure and are currently unemployed are related to the fact that the programs are voluntary. It is up to the financial institutions, the mortgage servicers and the investors to decide who receives aid and who doesn’t. James Parrot, an adviser at the White House’s National Economic Counsel, stated, “We are trying to be careful in designing programs that, at the end of the day, aren’t just about spending money but getting people back on their feet.”

Home Affordable Mortgage Modification Program (HAMP)

The Home Affordable Mortgage Modification Program was designed as a foreclosure prevention initiative. Approximately 675,000 homeowners have received mortgage modifications under this program. This represents less than 10% of the homeowners who required financial aid to keep their homes from being foreclosed upon.

Department of Housing and Urban Development Program

There is a program that has been initiated by the Department of Housing and Urban Development to deal with unemployed homeowners. More than a million dollars has been allocated to finance this program. The program is designed to provide loans to homeowners who have lost their jobs. These loans can last for a period of up to 24 months. As of the present date, there are only five states that have implemented this program.

Conclusion

The foreclosure mess in the United States, initially caused by granting sub prime loans to unqualified homeowners, is further exacerbated by the unemployment crisis that continues to exist in this country.

Bankruptcy and Foreclosure

We are foreclosure defense lawyers. We help homeowners stay in their homes, even when they’re in foreclosure. We assist homeowners with mortgage modifications and mortgage modification programs that fail to meet their needs.

We litigate predatory lending issues, defective foreclosure lawsuits, defective mortgages and issues involving federal laws and foreclosure. We attend foreclosure court conferences on behalf of our clients. We discuss foreclosure related bankruptcy issues.

In the appropriate circumstances, we file Chapter 7 and Chapter 13 bankruptcieson behalf of our clients. We discuss with our clients why bankruptcy filings will be helpful to them and the types of bankruptcies available to them. Filing bankruptcy can stop foreclosures from moving forward and stop debt collection from collection agencies and collection lawyers. At the end of the bankruptcies, we can help our client in re-establishing credit. We appreciate your spending time on our foreclosure blog.

The Federal Bailout of Banks Continues

Many of the largest banks in the country have been paying back the federal government for the loans given to them several years ago when they were in financial difficulty. However, this is not true of all financial institutions. More than 600 financial institutions still collectively owe the federal government more than $30 billion dollars. This amounts to about 13% of the $245 billion dollars that was given to banks by the federal government to bail them out.

SunTrust and KeyBank are two of the larger financial institutions still utilizing federal funds from the bailout. Some of the financial institutions have used the federal bailout money to buy other banks and to line their investment portfolios. This is not what the federal bailout funds were intended for!

When the federal government became involved in the bailout, there was no end game as to how to extricate themselves from loaning money to banks. The Troubled Asset Relief Program, commonly referred to as TARP, injected the federal funds into financial institutions to prop them up during the height of the banking crisis. The issue now is when does the government get this money back and when does the program end.

The Bailout Program is Profitable

The Treasury Department has indicated that they anticipate receiving a $12 billion dollar profit related to the funds loaned to banks under the bank bailout program. However, whether the federal government will ultimately make money or lose money depends on what happens with the 600 remaining banks that are still utilizing taxpayer funds. It should be noted that more than 140 banks have not been making their payments to the federal government. A substantial number of these banks will ultimately default on their debt to the federal government. Under the TARP program, the banks can hold onto their federal funds up to three years. The TARP program is also causing many small banks to merge to become more financially stable. Larger banks have access to capital, while smaller banks have greater difficulty obtaining capital. The intent to the TARP program was to render the banking industry in the United States healthy. Hopefully this program will be a continued success.

Long Island Foreclosure Defense Attorneys

The foreclosure defense and bankruptcy attorneys at the Law Offices of Schlissel DeCorpo can help you with the following items: mortgage modifications, mortgage modifications that fail to meet your needs, foreclosure conferences, defective foreclosure lawsuits, predatory lending issues, real estate problems, defective mortgages, bad faith by financial institutions, Chapter 7 bankruptcies, Chapter 13 bankruptcies, providing information concerning mortgage terms and foreclosure terms, discussing the types of bankruptcy that may be available to you, re-establishing credit after bankruptcy, eliminating second mortgages and stopping foreclosure.

You also may want to take a look at our foreclosure blog. Call us for a consultation for any of the aforementioned items.

Foreclosure Defense in Valley Stream, Lynbrook, Baldwin, Malverne, Freeport, Oceanside, Long Beach, Elmont, Lakeview, West Hempstead, Hempstead, Merrick and Bellmore, New York

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