Sanders to Testify on Foreclosure Crisis
Posted: December 8, 2009 at 1:04 am, Last Updated: December 7, 2009 at 5:20 pm
As of September of this year, 14.4 percent of borrowers were either in foreclosure or delinquent on their mortgages. According to a Deutsche Bank research report, 25 million homes, or 48 percent of mortgages, will be in a negative equity position — meaning a homeowner will owe more on a mortgage than the home is worth— before the housing recession ends.
On Tuesday, Dec. 8, Distinguished Professor of Real Estate Finance Anthony Sanders will testify as an expert witness before the U.S. House of Representatives Committee on Financial Services. The topic for the hearing is the private sector and government response to the mortgage foreclosure crisis. Sanders will focus his testimony on the Obama administration’s “Making Homes Affordable Program.”
In his testimony, Sanders will cite several reasons why so few loans under this program will make the transition from temporary modification to successful permanent modification. For a loan modification to become permanent, the homeowner needs to provide proof of income and other paperwork. Some of those reasons are: the degree to which many residential loans in the United States are in a negative equity situation; the unemployment rate; and what Sanders refers to as “the documentation problem.”
Sanders will also suggest accounting changes to permit financial institutions and investors to remove their distressed assets from their books.
“Helping financial institutions and investors dispose of their distressed assets was one of the original purposes of TARP [Troubled Asset Relief Program], and we should now consider the wisdom of cleaning up financial institution balance sheets rather than judicial interventions,” says Sanders.
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