| Foreclosures are the biggest financial problems in | | | | following are: |
| U.S. and have led the real estate market to crash | | | | 1. Bulk Auction Sale: This facility is provided by the |
| badly while raising questions on the liquidity | | | | government authorities to private lenders and |
| scenario in the economy. The banks initiate the | | | | banks to sell off their NPA to the government |
| foreclosure when the borrower is not able to pay | | | | and recover their loan amount. The government |
| the monthly installments. The banks in order to | | | | authorities shall support the homeowners for |
| escape the NPA's, auctions the property for | | | | some period to make them come back on |
| recovering the loan. This abrupt sale by the banks | | | | payment cycle. |
| leads to reduced property prices in the market as | | | | 2. Providing protection to lending companies: The |
| the banks is initiating an immediate sale and the | | | | government is working on methods to provide |
| purpose behind sale is recovery of outstanding | | | | cover to the lender in case of a lawsuit filed by |
| amount. The bank is not concerned with the | | | | the borrower which is the main reason why |
| market price of the property. This is the worst | | | | banks initiate foreclosures. |
| for any real estate. | | | | 3. Freezing Interest Rates: The government is |
| As a result of the above problems, Government | | | | trying to freeze housing rates where the loan |
| of U.S. has started working on methods to stop | | | | amount will not be increased and the installment |
| these increasing foreclosures. | | | | shall be same for coming years which will not |
| Foreclosure destroy the Homeowner | | | | disturb the payment capacity. |
| Foreclosure is a serious problem for any | | | | 4. Starting Research groups: The government has |
| homeowner and the same destroys the | | | | setup certain authorities which will be led by |
| homeowner financially. There could be various | | | | experts of finance to understand the problems |
| reasons for a foreclosure which may be divorce, | | | | faced by borrowers and work on solutions for |
| unemployment, interest rate hike, bankruptcy or | | | | them. |
| death of the borrower. The homeowner who | | | | 5. Control on Lending institutions: The government |
| comes under foreclosure is deemed financially | | | | is planning take control of lending institutions which |
| unfit for several years and the bad credit record | | | | can not forcefully initiate foreclosures and help the |
| does not allow any other institution to lend credit | | | | borrowers in repaying. |
| to him. The borrower has to immediately the | | | | These steps by the government shall help in |
| house which makes him lose his shelter. The | | | | understanding the problem f borrowers and |
| impact of foreclosure on homeowners affects | | | | solving the same by working out methods. The |
| their personal, financial and social life. | | | | government is working on checking the increasing |
| Steps taken by Government | | | | rate of foreclosures and is planning methods to |
| The U.S. government is working on several | | | | resolve issues with banks and borrowers which |
| methods to stop this increasing financial devil. The | | | | brings the borrowers on payment cycle. |