With foreclosure numbers still rising, the US Government is doing all it can to reign in the housing market. One area that has been untouched as of yet is that of those borrowers who may have the potential of refinancing to stay in their homes but can not do so because of the fall in value of the property in the last few months.
A new regulatory proposal is being studied by the US Treasury Department in the efforts of helping homeowners in this situation. The program, though still in the works, aims to provide "negative equity certificates" which would help servicers to recoup some of the loss they will see when they refinance this type of property.
The Office of Thrift Supervision is currently working on the proposal. It would be part of the Bush Administrations programs to help homeowners in a tightening foreclosure situation.
The program is heavily in demand should it go through. The government and officials see an alarming trend of homeowners that would rather simply walk away from properties that are seeing this type of fall.
According to Mark Zandi, who is chief economist and co founder of Moody's Economy.com, there is likely to be a 20 per cent drop in the home prices in much of the country going forward.