The worst part of the recession just in front of us by Martina Harvanova

"You are being considered for a loan modification, which is a change in the original terms of your mortgage contract. If you qualify, this could reduce your interest rate or extend the time you have to repay your loan, or both." That is exactly how the beginning of the letter - the new move done by six American financial institutions sounds. The target is to give all homeowners another chance in effort to help them in their delinquency on the loans.Homeowners entangled themselves as the U. S. economy had started to experience its steep slump in the second half of the 2007. Decline in home constructions and consequently, a plunge in prices of all estates led to the nationwide troubles among consumers, producers as well as among head state officials. †Considering the issue regarding sinking value of real properties, wrinkles occurred mainly on the foreheads of homeowners who suddenly realized their homes don't reach the required value to cover their loans. The circumstances put them in danger of loss of their properties. The recently taken step should provide the borrowers who are 90 days or more behind their mortgage payments with a 30-day reprieve to help their homes not to face foreclosure. On the other hand, the initiative may work as an awkward and too hurried plan whose process and operation isn't mature and efficient enough. In fact, majority of the analysts affirms the program can't work as a solution to the housing crisis, moreover it's considered just a "pause" in the foreclosure process. However, the worst part of the unpleasant housing situation still stays in front of us and is awaited to happen in the moment when holders of about 2.8 million subprime mortgages come up for interest-rate resets. †That is why the actions should meet more system requirements and mentioned actions of "cosmetic modifications" can't be able to solve the case.Economic packages introduced by the U. S. government will definitely improve a part of the situation, but the deterioration of the economy in the North America isn't likely to find its easy way to survive without any harms. System moves are the best solution to soften the negative impact of the situation.

related story: http://www.marketwatch.com/news/story/stop-foreclosure-lenders-agree-slow/story.aspx?guid=5445B9DA-C350-4C92-B7C2-1EBF88751EB0

by Martina Harvanova for PocketNews (http://pocketnews.tv)

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Edited by Katarina Rastocna