April 28, 2006
Community Developments Newsletter Focuses on Foreclosure Prevention
WASHINGTON – A new OCC publication provides strategies and recommendations aimed at preserving homeownership by preventing mortgage foreclosures.
Writing in the new edition of Community Developments, Comptroller of the Currency John C. Dugan said a home foreclosure is more than a personal tragedy. "Foreclosures can destabilize communities, creating vacancies that mean lost property tax revenues and that can become magnets for crime in addition to lowering adjacent property values."
In recent years, homeownership has reached record-setting levels in the United States. Low interest rates, a strong housing market, and innovations in the mortgage lending business have combined to make the American Dream a reality for more and more Americans. But there is a potential downside to this homeownership boom.
Some new borrowers have little experience managing debt. Others have used non-traditional mortgage products such as "interest-only" and "payment-option" adjustable rate mortgages to afford a home but, in so doing, have exposed themselves to potentially significant financial risks. Recognizing the risks many of these borrowers and their lenders face, this issue of Community Developments looks at what happens when non-traditional and other borrowers get into trouble with their loans
"Our focus is on homeownership preservation," said Comptroller Dugan. "After all, qualifying for a loan to buy a first home won’t be cause for celebration if the home is later lost to foreclosure."
The newsletter focuses on a number of ways banks can help to reduce foreclosures through partnering with non-profits and successfully implementing early intervention strategies with troubled borrowers.