Only 7% of Borrowers are receiving help from Obama’s Mortgage plan!
Tuesday, February 9th, 2010The AP reported in January that the plan to fix the foreclosure crisis by President Barack Obama’s has been a dud!
This has placed the nations housing market recovery at risk.
It appears now that hopes were inflated when Obama revealed his program in Arizona to high school students (that should have been a clue right there) last February 2009. A year later, only about 750,000 homeowners — a fraction of the 3 million to 4 million originally projected — might complete just the application process. This is a prediction from Mark Zandi, chief economist at Moody’s Economy.com.
In 2009, a record 2.8 million homes faced foreclosure. That’s over 20 % than 2008 according to RealtyTrac Inc. But even worse, they expect another record this year for foreclosures
Meanwhile home prices are down 30 percent from the peak in mid-2006, and there is mounting evidence they will fall again during the winter. A big reason is low-priced foreclosures are making up a larger proportion of sales.
What this means is more borrowers can not be helped forcing them into foreclosure. The foreclosure properties will flood the market. The apparent nation’s housing recovery last summer could soon take a turn for the worse.
The Obama plan had aimed at helping borrowers in financial difficulties by making their payments more affordable. Dropping their payments.
Did you hear that Bank of America and Wells Fargo?
The modifications were suppose to lower interest rate and often a longer repayment period. The monthly payment was to have been cut by $500 on average. Homeowners would receive temporary modifications and payment releif, which was supposed to become permanent after a trial period. During this trial period, borrowers would make three payments on time and complete the required paperwork, including proof of income and a letter explaining the reason for their troubles.
However, only 66,500 borrowers, or 7 percent of the people signed up, have completed the program thru December, according to the Treasury Department.
5 % or another 49,000, have dropped out of the program entirely. They either missed payments or were found to be ineligible. Thousands more remain in limbo awaiting an answer.
So what went wrong?
There’s blame on both sides: Mortgage companies say they have struggled to get back the necessary paperwork, while homeowners and housing counselors say navigating the bureaucratic maze often seems impossible.
I can attest to the latter.
Look on You Tube or some of my earlier stories. The Banks are ill-equipped and not capable or worse when dealing with any modification.
Something more drastic needs to be done with the Lenders.
More in my next article.
What have you experienced or found out?
J Michael Seely