Home Loan Modifications: Why Federal Government’s Mortgage Modification Program a Mix of Good and Bad News for Homeowners
While the Obama administration’s foreclosure prevention program continues to help some struggling homeowners, it is doiong so at a snail’s pace – and it hasn’t helped nearly as many as it was projected to in the beginning.
The Good News for the Government’s Foreclosure Prevention Program
Permanent modifications are happening: Just last month, 37,000 homeowners had their home loans modified.
Temporary home loan modifications: As of July, approximately 1.3 million homeowners have had thier mortgages modified to lower payments — at least temporarily.
Payments lowered by more than a third on avearge: Homeowners lucky enough to have their mortgages modified — either temporarily or permanently — have on average received a reduction of 36%, which works out to more than $500 a month.
In spite of these numbers, following are some reasons many think the Obama adminstrations stop foreclosure program has been such a colossal failure.
The Bad News for the Government’s Foreclosure Prevention Program
Permanent modifications hard to come by: When the Homes Affordable program was implemented last year, it was projected to help between 4 million and 9 million homeowners, depending on which source you read, prevent foreclosure. But, so far less than 500,000 have gotten permanent modifications.
And, this is what’s needed as most struggle to replace jobs they’ve lost. And, this is what leads to the next statistic, which is . . .
Cancellations in the program are up: Many don’t qualify for help at all under the program. And for those who do and have gotten help, they’re prone to default again. Proof? So far, according to the Los Angeles Times article, Federal foreclosure prevention program still growing, just not as fast:
12,912 permanent modifications [of the 434,716 granted since the program began last year] have been cancelled, nearly all because the homeowner has missed at least three straight payments.
This is because people need jobs to keep up with payments. Also contributing to this factor is that many banks aren’t writing down principals, which means many homeowners have to make higher payments – and with unemployment continuing to hover around double digits, many simply can’t keep up — even with reduced payments.
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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.