The 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

With the new mortgage bailout plan, many homeowners are questioning whether or not they should continue to pay their mortgages. If you do make your mortgage payments on time, can you still receive help from the proposed mortgage bailout plan?

The answer to this question is a definitive “maybe.” With the economic stimulus bill that passed into law by President Obama, $75 billion will be allocated towards preventing four million homeowners from losing their home. However, neither paying nor stopping your mortgage is an automatic qualifier for help through this program.

How Will the Bailout Plan Work?

In 2008, over 1.3 million homes foreclosed as owners were unable to meet their monthly mortgage obligation. Most of these foreclosures were a result of either job loss or an adjustable rate mortgage (ARM) payment ballooning beyond affordability. Millions of more homes are expected to enter into foreclosure over the next few years.

Mortgage companies are not in the business of repossessing homes and selling them. However, they can be hesitant to restructure a mortgage with a homeowner without the proper financial means to repay the principal and interest each month. With the new bailout, however, the $75 million will be going toward guaranteeing mortgage companies a portion of the mortgage if they agree to restructure with a qualified homeowner.

Who Qualifies for Bailout Assistance?

How do homeowners in jeopardy of losing their homes qualify for a restructured mortgage? The main aspect that your lender and the government program will review is whether you have a financial hardship. They will look at whether you have lost income due to unemployment, layoffs, cutbacks at work, etc. A serious financial setback that puts you at risk of foreclosure will at least get you a review with the program.

However, you must be able to make a new mortgage payment. If you have suffered unemployment and have no future prospects for immediate employment, the mortgage company will assume that you do not have the means to repay the mortgage – and therefore, does not have any motivation to work with you. When you approach your lender to restructure, be sure that you can prove your means of making a monthly payment.

The other main issue that the bailout program will evaluate when determining your eligibility to restructure is if your current mortgage payment is greater than 31% of your gross monthly income. If so, you may qualify for a mortgage restructure to lower your payment to 31% or below.

Who Does Not Qualify for Assistance?

If you are not currently delinquent and can still make your mortgage payment, don’t expect to get help with the bailout program. Continue to make your mortgage payments on time and protect your credit history. Ultimately, you need to keep in contact with your lender and keep them informed of any changes in your financial situation. A borrower who is upfront with their lender is more likely to receive consideration from the lender in working out mortgage issues.

This article is intended for general information. Always seek sound financial and legal advice before making any financial decision.

Helpful mortgage information at Online-Home-Mortgage.net P. Payne works for OHM Mortgage and Foreclosure Information Site providing answers to all those questions people need to know.
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