Jackson, 55, who owns a single-story home on Chicago’s blue-collar South Side, said: "I was behind two months, but I didn’t want to lose my home and see it boarded up."
Just four doors away, a house that went into foreclosure last year is boarded up.
Jackson recalls watching as squatters moved in and stripped it of anything that could be sold.
Fearing her home was next, she approached her lender, Homecomings Financial, a unit of GMAC Financial Services.
To her surprise, it cut the interest rate on her $80 000 mortgage, reducing her month-ly payment to $713 from nearly $1 000.
With two part-time jobs – as a book keeper and a cosmetics door-to-door saleslady – Jackson says she can now afford her payments.
With so many houses in the United States facing foreclosure, mortgage lenders are starting to offer favourable deals for distressed borrowers like Jackson that they would not have agreed to just six months ago.
This is not altruism, but a case of lenders trying to avoid being stuck owning hundreds of thousands, or even millions, of homes, say economists, academics and other experts.
In the third quarter of 2007, mortgage companies had modified the terms on 54 000 loans and had worked out new repayment plans for another 183 000, the Mortgage Bankers Association said in January.
For lenders, there are financial incentives to keep people in their homes, even if it means cutting interest rates and making less money. When a home is foreclosed, the lender takes ownership of a property that quickly loses value, with no revenue coming in. They are also liable for property taxes.
Geoff Smith, project director at Chicago-based community development group the Woodstock Institute, says: "It’s in their own best interest to help people save their homes," he said. "Less revenue is better than none." – Reuters
These clippings are provided for "fair use" not-for-profit,
educational purposes (and other related purposes). If you wish to use
this copyrighted material for purposes of your own that go beyond "fair
use," you must obtain permission from the copyright owner. Please
contact Woodstock Institute for more information.