IMF Urges Obama to Address Foreclosure Crisis

By Korollos Shalaby

The problems of the administration of President Barack Obama to address the foreclosure crisis show the slow housing debt is recovered from deep recessions, the International Monetary Fund (IMF) said in a report .

The agency cited the failure of government flagship program to prevent such liens, in a report released Tuesday on household debt.

The IMF said that fewer than 1 million mortgages have been changed in the United States under the Home Affordable Modification Program, HAMP, against the Government's initial target of between three and four million.

Nearly 8 million Americans are facing foreclosure since the bubble burst in residential construction.

The report noted that the HAMP offered limited incentives to banks and tightened the criteria for application to the program. He said, moreover, it did not reduce monthly mortgage payments to make them affordable enough in many cases - only 11% of permanent modifications included decreases in the amount mortgaged.

The IMF stressed that the government tried to improve other assistance programs in February to increase the number of people eligible and increase the incentives for banks to offer reductions.

However, the IMF warned that millions of American's remain at risk of losing their homes and governmental procedures have not reached the magnitude of the measures taken during the Great Depression.

"Some 2.5 million properties are subject to foreclosure and another 1.5 million are in default. Figures are amazing," said Daniel Leigh, lead author of the IMF report, in a press conference. "There remains a need to do something."

One of the main reasons for the low number of mortgage reductions is that Fannie Mae and Freddie Mac, which fund half of U.S. mortgages, have not reduced the value of debts in cases where homeowners at risk of foreclosure .

Edward DeMarco, the federal regulator that oversees the accounts of Fannie Mae and Freddie Mac, the mortgage banks seized by the federal government, opposed the idea of ​​reducing the amount of the mortgage on the grounds that it would jeopardize the taxpayer funds, despite pressure from lawmakers and the White House.

On Tuesday, DeMarco said his agency would consider the idea.

In other news, Goldman Sachs Group Inc and Morgan Stanley will pay $ 557 million in cash and other assistance to troubled borrowers to conclude a case-by-case foreclosure required by U.S. regulators.

The U.S. Federal Reserve said Wednesday that the two banks will pay $ 232 million to eligible borrowers and 325 million in credits modifications and forgiveness.

The agreement is similar to the 8,500 million dollars that materialized the Fed, the Office of the Comptroller of the Currency and other banking service 10 January 7.

The Fed had ordered Goldman and Morgan Stanley to revise foreclosures conducted by mortgage services business both acquired investment banks before the subprime mortgage crisis.

Korollos Shalaby is a nationally acknowledged mortgage expert with over 6 years experience as a loss mitigation expert and mortgage finance consultant. He has owned several companies and has been at the forefront of all lending and banking practices since 2006.