Great News for Homeowners

Government officials and top level real estate industry executives are on their feet now to tackle the slow market caused by foreclosure homes. New initiatives have been designed and implemented to check the increasing number of foreclosure homes in New Jersey. Much of the initiative focuses on helping the homeowners retains their homes by assisting them in re-doing their finances. There are collaborations between banks and public welfare organizations to decrease the rate of foreclosure homes.

Looking at the growing foreclosure homes in New Jersey, Federal Home Loan Bank based in New York which is already providing loans to over 300 regional banks in New York, Virgin Islands, Puerto Rico and New Jersey has taken a new initiative. In this program known as HARP (Housing Assistance and Recovery Program), the Federal Home Loan Bank granted a loan of $6 million to Magyar Bank operating from New Brunswick, N.J. Homeowners who fear foreclosures are identified by First Baptist Community Development Corporation. The corporation then buys out the loans from the lenders.

The Home Loan Bank provides the leads while the Magyar Bank finances up to 70% of balance. To prevent converting homes in to foreclosures home in New Jersey, the HARP officials negotiate with the lenders to write off the 30% of remaining amount. The homeowners then become the renters in that house and pay the monthly rents to First Baptist Community Development Corporation. The corporation decides the rent depending on the financial status of the home.

The corporation helps out the families by offering financial counseling and also to regain their lost credit rating in the market. This enables the families to become eligible and apply for a new home loan.

Problem with this scheme as analyzed by Mr. Dellibovi, the chief executive of the Home Loan Bank is finding new lenders and servicers. The loans are normally purchased by investors, at times repeatedly making it difficult to get new lenders. Servicers may not be interested in the deal because they get more money in foreclosure homes in New Jersey rather than finding the ultimate holder of a loan.

Mr.Dellibovi said they are in talks with other banks and public welfare organizations for the said purpose and reduce the number of foreclosed homes in New Jersey.

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