Foreclosure Moratoriums... Short Term Solutions for Long Term Issues

Many people feel that the recent "bailout" bill doesn't do enough for American homeowners facing foreclosure. Non-profits and government representatives alike are calling for more help for Main Street, and one of the suggestions is a moratorium on foreclosures across the nation. People say that an across-the-board moratorium would allow homeowners more time to find a solution, create a workout package with lenders, and take advantage of proposed government programs.

I ALMOST agree with that, but there is a fundamental element that is missing from this suggestion.

Yesterday, I was interviewed on WPFW in Washington, DC. The phone lines were lit up with callers asking about their homes, their bankruptcy situations, their initial mortgage choices and mistakes, what they should say to lenders... information that is critical to assist them in saving their homes. I continue to see the extent of confusion people have about the process... confusion that does not go away with more TIME, but more EDUCATION.

Recent reports show that we are nearing 750,000 homes lost to foreclosure this year. There were more than 107,500 foreclosures in September alone - an 82.6% increase from this time last year. How many of those homes could have been saved if the owners knew what to do?

Many states have enacted extended timelines for homeowners facing foreclosure. They haven't, however, shown these homeowners WHAT TO DO in the mean time. This will result in an immediate dip in foreclosure numbers with a spike in filings and auctions in a month or two.

It's just a delayed sale, not an actual solution.

Now, if they implement an EDUCATION element to this delay, they may be able to do some actual good. People need information. Lenders are saying that people aren't calling in to find out what to do... this is true. However, in this crisis, with $700 billion dollars available to fix the issue, I think banks and servicing companies can afford to do a bit more outreach.

Education is the key.