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MSN: Homeowners may see principal reductions
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Freddie Mac is hinting that government-sponsored home mortgages may soon
offer a big "out" for troubled homeowners -- reduced principal on their mortgages. Is it too good to be true? Maybe not.
There's no debating the fact that mortgage foreclosures, after a brief respite, are creeping upward again.
According to RealtyTrac, foreclosures could rise by 25% in 2012 as banks and mortgage lenders clamp down on delinquent homeowners now that the "robo-signing" scandal is in the rearview mirror.
Last year saw a reduction in foreclosures as lenders haggled with state attorneys general in court over the validity of mortgage documents filed by mortgage servicers.
That issue has largely been resolved after a $25 billion agreement between lenders and state attorneys general, with the bulk of the money going to help homeowners who have either been foreclosed upon or are delinquent in their mortgages.
That's why only 1.89 million properties were foreclosed upon in 2011, down 34% from 2010 -- banks and lenders had to get their legal ducks in a row before clamping down on delinquent homeowners.
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