Washington's Report- Anti-foreclosure Program

The Obama administration just revealed its scorecard on its anti-foreclosure program recently, and there's just one word for it: minimal.

Roughly of the one million financially burdened homes in the country who have been given mortgage payment reductions through three month trials, only 116,000 have been given permanent load modifications from participating lenders. The Home Affordable Modification Program was the institution that created this assistance program. Also, 60,000 borrowers have been kicked out of the program for several reasons.

Last year Obama and his administration said the program would help three to four million Americans in the next few years. They made this claim with very unrealistic expectations, and they know it now seeing the numbers that actually appeared.

      The complications that have disrupted the HAMP efforts so far:

          This program allowed borrowers to request three month trials without documentation of their income. Many of them were able to withstand the trial periods, but they weren't able to complete the program requirements such as documenting their income.

          The program was designed to withstand a 31% decrease of monthly household incomes, but it cannot withstand the common situations where job losses have sharply reduced household incomes. Most of these end up in foreclosure.

         The program is limited to only monthly payment reductions, not cutting its principal they owe. This program is designed to help out a few distressed homes, not the 15 million Americans who jumped into a losing battle.

It's often argued that these foreclosures cannot be averted until most borrowers and lenders agree to write off some of the debt they owe. A good point to keep in mind is that buyers are not the only ones to blame. Some knew they weren't capable of making their monthly payments, but the lenders knew this too. They lent out their money for property that wasn't what they thought it was worth. In order to help the situation a little, lenders need to accept their loss, and lower a bit of the borrower's principal.

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