Tuesday, May 11, 2010

Loan Modification Program Pretty Much A Failure

This seemed like a dubious idea when it was started, and apparently it has gone almost nowhere. Mortgage providers resisted the idea intensely, and hoping the home market would turn around, had every incentive to stall. Homeowners, impaired by lost earnings, were hopeful at first, but were granted no favors by a long, drawn-out process that led in circles. Quite frankly, it's easier on everyone to stay just as long as possible rent-free, then just walk out the door and leave the keys on the countertop:
When the administration launched its foreclosure prevention program, it committed to spend up to $75 billion. By the end of March, more than a year later, only about $242 million had actually been paid out.

That number is sure to rise, but it’s a testament to how slowly the program has progressed. The low total is a direct result of the low number of permanent mortgage modifications so far: 228,000 as of the end of March. About 1.2 million homeowners have begun trial modifications, but many have been stranded in the trials for longer than the three months they were designed to last. About 158,000 have been dropped from the program, either because they couldn’t make the payments or because of disqualification.

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