Obama Prevent Foreclosure Program Causing More Homeowners to Default on Their Mortgage
The Obama administration’s foreclosure program, HAMP, may be causing more homeowners to voluntarily walk away from their mortgages. This is according to a 3/23 report on HuffingtonPosting.com entitled, Average Homeowner In Obama Foreclosure Program Underwater, Yet Principal Cuts Rare.
Why More Homeowners Likely to Default Under the Obama Administration’s Foreclosure Prevention Program
According to the report, the program is causing more homeowners to be underwater on their homes (ie, owe more on the home that it’s worth). And this is no small amount in some cases. The article states:
The average homeowner may owe their lender as much as two-and-a-half times more than the home is worth (emphasis added). . . The Treasury Department told government investigators that the average homeowner likely owes their lender about $1.14 for every $1 of the home’s current market value . . .
Hence, many homeowners feel like renters in their homes. Looking at the hard numbers, many take the view that it’s better to start over and rent than continue to stay in a home that is depreciating in value — and with no hope that it’s going to get better soon.
Help for Homeowners Who Are Underwater
In light of this, the administration recently funded a $1.5 billion pilot program for the five states that have had the biggest declines in home prices. This fund was set up to encourage state officials to experiment with solutions that will reduce the home foreclosure rate.
Many are hoping that one of those solutions is to implement widespread cuts in principals owed, which will encourage many homeowners to hang on to theri homes insterad of moving ahead with voluntary foreclosure (where a homeowner can afford to pay the mortgage, but decides to walk away anyway).
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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.