Equity Fund Launched to Help Stem Foreclosures with Principal Write-downs

Freehold, New Jersey-based ""First Equity Capital, LLC"":http://www.firstequitycapital.com has established a private equity fund to buy pools of non-performing mortgage notes in an effort to stem the tide of foreclosures and delinquencies.
In a press statement, the company explained that non-performing mortgage pools are currently trading at deep discounts due to the stressed financial system and severe capital constraints on Wall Street. First Equity Capital plans to buy these mortgages, reduce principal balances to reflect current market values, and create manageable monthly payments so borrowers can stay in their homes.
In response to the still rising tide of foreclosure numbers and pressure from lawmakers and mainstream media, the federal government and large institutions such as JP Morgan, Citigroup, and Bank of America have all announced loan modification programs. However, most of these programs fail to reduce the principal of the loan, instead bringing the mortgage current by reducing payments and extending the duration of the loan.
According to John Child, managing partner at First Equity Capital, ""Many of these modifications are doomed to fail since so many borrowers are upside down on their mortgage and need some sort of meaningful principal reduction.""
First Equity Capital said it plans to explore every avenue to avoid foreclosures and will take a hands-on approach that is different from existing loan-modification programs.
Child said, ""The strategy is a win-win proposition for all the parties involved. Borrowers stay in their homes, financial institutions rid themselves of non-performing assets, and investors receive an attractive return on investment.
""There is a critical need for the private sector to step in and help stabilize the housing market,"" Child added.
""First Equity Mortgage"":http://www.femtg.com/ and ""New Vision Title Corporation"":http://www.newvisiontitle.com/index.php established First Equity Capital, LLC in 2008 in response to the distressed mortgage market, based upon the substantial investment potential and need for the private sector to fill the void created by the overwhelming number of delinquencies and foreclosures.