Government Foreclosure Moratoriums And Modification Plans

Posted by Faizan Shiwani / at 4:47 AM / /

A lot of foreclosure victims seem to have a false idea of what a foreclosure moratorium is. Many seem to think there is a nationwide moratorium that is preventing foreclosures, while others believe that the President is bailing everyone out of foreclosure. These two ideas couldn't be further from the truth.

If you are facing foreclosure, please don't wait around for a bailout plan to save your property! More foreclosures are happening each and every day; while foreclosure victims think their lender is trying to get them a loan modification, their home gets auctioned off right out from under them.

If you are expecting your servicer to get you a modification or bailout, you need to make sure you have a back up plan for when theyturn you down! And that's assuming they are even applying for a modification in the first place. Many lenders tell you they are "working" on your case, while they quietly continue foreclosing on your home. This is a drastic problem and foreclosure victims need to wake up and stop believing the lies!

Foreclosures are still growing in many areas and because of this, many communities are being left with nothing. As local governments realize the federal bailout plan isn't working, they are starting to impose their own foreclosure rules and moratoriums.

Federal moratoriums are not a mandatory requirement. In some cases, only certain loans qualify for the moratorium. In others, the lenders are only asked to participate, but no laws or rules are forcing them.

When a local court or government forces a moratorium, it usually applies to all foreclosures in that particular county.

Many of the bigger banks have voluntarily agreed to these moratoriums, even when it was not required of them by law, but for the most part, the moratoriums have ended and banks are back to foreclosing on homes in full force.

Foreclosure moratoriums have been tried, sporadically, over the last 12 months.

Different banks, courts, or government agencies have determined that it may help. In reality, these moratoriums are not doing much of anything to help stop foreclosure. They are simply putting off a problem until sometime in the future; as we all know, procrastination is never a good thing. Local courts seem to be following the federal government's lead, by starting with a 90 day moratorium and allowing homeowners to stop foreclosure before this 90 day period ends.

The problem with this idea is that no one really knows what to do to stop foreclosure. Many people think the government is helping them, so they sit back on do nothing. Servicers don't understand what to do either, so they are just letting everyone apply for a modification, while giving them false hope that they will get the mod.

Today, one thing is absolutely clear, the only homeowners getting help are those who take action on their own and forget about bailout plans and moratoriums! Those who find their own way out of foreclosure or hire a professional to help them are saving their homes at a much higher percentage rate. In fact, many loan modification companies have success rates well above 90%. This is much better than the 20% success rate our government may one day achieve.

Others are still losing their property just as fast as before; even faster in most cases, because court systems and lenders are now fast tracking the foreclosure process. There are so many foreclosure cases that foreclosure victims are no longer getting a impartial trial. Some courts are speeding through foreclosure cases in just a few minutes per case. Proper documentation is no longer necessary and the foreclosure victims never even have a chance without professional help to protect them.


Originally it was though that a moratorium would give families enough time for the government to offer a bailout plan, but now we all realize that the government's idea of a bailout doesn't really help the average family. I think it's common sense that procrastination is never a greatthing and that's basically what these moratoriums were. Rather than devising an actual solution, it was easier to put the problem off for 90 days.


The main problem with a moratorium is that it gives the foreclosure victim a false sense of security. They think their home is safe; in reality, after the moratorium ends (most moratoriums last 90 days) the foreclosure process will proceed as if it never stopped. In some cases, the foreclosure process even continues during the moratorium and the sale happens almost right away after it ends.


If you are lucky enough to have a foreclosure that has been stopped by a moratorium, the don't waste any time searching for a solution, so your property is not lost when the moratorium is finished! Use this time wisely to recover from your financial hardship, or to employ a professional to negotiate the terms of a loan modification with your bank.


There are many solutions to stop foreclosure, but remember, a moratorium is not one of them! Unless the foreclosure situation is resolved during this time, the home will be lost when the moratorium ends.