The New York Times has posted an article about how the Obama administration’s mortgage relief program, which was originally supposed to prevent about 3 million foreclosures, now looks like it will only stave off around 500,000 foreclosures.
The dropout rate for one of these programs, Making Home Affordable Program- designed to “modestly reward lenders for modifying mortgages”, is very high. 96,000 of the trial modifications were cancelled by lenders in July of this year alone, bringing the total of cancelled trials to 616,000. Such high numbers have prompted housing experts to call the program a failure, but the administration insists that many households were helped, even if just temporarily.
“They were able to benefit from reduced mortgage payments each month at no cost to the taxpayers,” Herbert M. Allison, an assistant Treasury secretary, said during a briefing.
The high number of cancellations, according to the administration, is because of government’s rush to set the program up. Lenders were told to enroll homeowners first and ask questions later. Because of this, many applicants didn’t qualify for permanent modifications, whether it be because their paperwork was incomplete, they didn’t live in the house, or because the “debt load was not heavy enough.” Herbert Allison says that many of the homeowners who were turned away for permanent modification received other forms of aid.
About 422,000 mortgage modifications overseen by the government were considered permanent as of July, up from 389,000 in June. But the pool of candidates is shrinking rapidly. Only 17,000 trial modifications were started in July, down sharply from the 150,000 enrolled in September when the program was new.
The program will likely not offer any long term relief or solutions, as debtors are still in debt “up to their eyeballs,” just with modifications instead of their original mortgage.
If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama, Wrongful Foreclosures In Alabama, The First Common Mistake Alabama Consumers Make When Sued For Ejectment, Should I Trust A Foreclosure Lawyer To Advise Me?, Overview Of Five Common Mistakes Alabama Consumers Make When Sued For Ejectment and What Do I Need To Bring To My Meeting With An Alabama Foreclosure Defense Lawyer?
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