Obama May Ban Foreclosures Without Review Posted by AVCU on 2:31 PM

Appraisal Newscast reports that the Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government's Home Affordable Modification Program. The proposal "prohibits referral to foreclosure until the borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,'' according to a Treasury Department document outlining the plan.

At present, lenders can initiate foreclosure proceedings on any loan that hasn't been submitted for HAMP eligibility. Under current rules, foreclosure litigation can proceed while borrowers are under review for the program or even in a trial modification. The proposed changes would prohibit lenders from initiating new foreclosure actions before loan screening by HAMP and would require lenders to halt existing proceedings for borrowers once they are in a trial repayment plan.

About 89% of outstanding residential mortgage loans are covered by the voluntary HAMP program. According to RealtyTrac, Inc., about 2.82 million US homeowners lost properties to foreclosure last year and 4.5 million filings are expected in 2010.

Read the detailed story here.