Solutions of a Professional for the Foreclosures Crisis

Broker tricks were used to help those who do not fall within the terms of credit, to obtain loans. They changed customer revenues, putting a relative as employer, or they used scanners and software to falsify official tax forms. They found ways to hide debts (such as payment for a car) using credit reports (credit history of an individual) in which the date was omitted. Also, the currently handled in the assessment, encouraging evaluators to look for “comparative elements – more good-looking houses, located in better neighbourhoods – all to raise the assessment on a home mortgage.

The rate of appreciation of properties registered in the U.S. in the last seven years was not only a function of market demand, but was due in part to the fact that sub-loans industry accepted inflated valuations, and high percentage of clients who are hardly included in the terms of lending, but were accepted without any cash contribution, say professionals.

Experts say that their companies have done everything they could to ensure that their clients could really pay loans on time. However, most often, they have aligned to the standards imposed by industry giants, where they have resold the mortgages. They have tracked the performance of billions of dollars in loans, so they had to follow their judgment on what was acceptable, they said. When these giants have begun to achieve mass failures at the beginning of 2007, it was too late. Last year, the company where they worked, which their former partners continued to lead, was just one of the tens of mortgage companies that faced bankruptcy.

In Washington, the Congress has held several hearings to determine what went wrong in the sub-loans industry and to determine how the situation can be regulated in the future. Experts have their own ideas. They believe that foreclosure mortgage brokers would have to pass the national licensing exam and that the fees for the services they offer should be transparent.

The evaluation process should be improved to give more independence to assessors, and debtors should receive mandatory counselling on credit before they are granted the loan, consider professionals. Former brokers do not believe that sub-loans should disappear entirely. The so-called credits “without papers” worked very well before becoming famous as “liar loans”. They were destined only to people who could pay serious rates. One day, after the foreclosure crisis will diminish, perhaps sub-loans will re-emerge as a business that works well because it addresses a group of small debtors and not the millions of owners of flats who want houses that cannot afford.

Increasingly, many houses used as collateral on loans are for sale. For lack of buyers, price gets to half of the initial value. Banks remained with apartments, which are worth increasingly less. The number of files of foreclosures, as national average, increased by about 70%, compared to last year. In November compared to October, the overall increase is about 12%, according to statistics done by heads of major companies specialized in debt recovery. In absolute numbers, this means that until the end of November, there had been for sale approximately 6,000 dwellings used to guarantee a bank loan.