Obama Mortgage Foreclosure Program A Complete Flop
Obama’s program to stop foreclosures is failing miserably. Nearly 50% of those seeking help are realizing the hopelessness of the program and are opting out.
Many who are in foreclosure are realizing that the Obama administration had little more than a campaign pip dream of an idea and the reality of what they are seeing is that the banks are taking forever to foreclose so many simply are living for free.
Coupled with the steady decline of housing values and a industry of practitioners that don’t know how to deal with foreclosures, the failure of Obama’s program is seemingly inevitable.
I guess this is Bush’s fault too!
Nearly half of the 1.3 million homeowners who enrolled in the Obama administration’s flagship mortgage-relief program have fallen out.
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The program is intended to help those at risk of foreclosure by lowering their monthly mortgage payments. Friday’s report from the Treasury Department suggests the $75 billion government effort is failing to slow the tide of foreclosures in the United States, economists say.
More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to foreclosure listing service RealtyTrac Inc. Economists expect the number of foreclosures to grow well into next year.
“The government program as currently structured is petering out. It is taking in fewer homeowners, more are dropping out and fewer people are ending up in permanent modifications,” said Mark Zandi, chief economist at Moody’s Analytics.
Besides forcing people from their homes, foreclosures and distressed home sales have pushed down on home values and crippled the broader housing industry. They have made it difficult for homebuilders to compete with the depressed prices and discouraged potential sellers from putting their homes on the market.
Approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the government program have been cut loose through July, according to the Treasury report. That’s about 48 percent of the those who had enrolled since March 2009. And it is up from more than 40 percent through June.
Another 421,804, or roughly 32 percent of those who started the program, have received permanent loan modifications and are making their payments on time.
RealtyTrac reported that the number of U.S. homes lost to foreclosure surged in July to 92,858 properties, up 9 percent from June. The pace of repossessions has been increasing and the nation is now on track to having more than 1 million homes lost to foreclosure by the end of the year. That would eclipse the more than 900,000 homes repossessed in 2009, the firm says.
Lenders have historically taken over about 100,000 homes a year, according to RealtyTrac.
Zandi said the government effort will likely end up helping only about 500,000 homeowners lower their monthly payments on a permanent basis. That’s a small percentage of the number of people who have already lost their homes to foreclosure or distressed sales like short sales – when lenders let homeowners sell for less than they owe on their mortgages.
Zandi predicts another 1.5 million foreclosures or short sales in 2011.
“We still have a lot more foreclosures to come and further home price declines,” Zandi said. He said home prices, which have already fallen 30 percent since the peak of the housing boom, would drop by another 5 percent by next spring.
Many borrowers have complained that the government program is a bureaucratic nightmare. They say banks often lose their documents and then claim borrowers did not send back the necessary paperwork.
The banking industry said borrowers weren’t sending back their paperwork. They also have accused the Obama administration of initially pressuring them to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.
Obama officials dispute that they pressured banks. They have defended the program, saying lenders are making more significant cuts to borrowers’ monthly payments than before the program was launched. And some of the largest mortgage companies in the program have offered alternative programs to those who fell out.
Homeowners who qualify can receive an interest rate as low as 2 percent for five years and a longer repayment period. Those who have successfully navigated the program to reach permanent modifications have seen their monthly payments cut on average by about $500.
Homeowners first receive temporary modifications and those are supposed to become permanent after borrowers make three payments on time and complete all the required paperwork. That includes proof of income and a letter explaining the reason for their troubles. But in practice, the process has taken far longer.
The more than 100 participating mortgage companies get taxpayer incentives to reduce payments. As of mid-June only $490 million had been spent out of a potential $75 billion the government has made available to help stem the wave of foreclosures.
US foreclosure scheme faltering … so has the Obama administration’s main programme to ease home foreclosures. Only 36695 homeowners received permanently lowered mortgage payments in July …
USA: the US Treasury says housing market is improving The Obama administration launched a series of programs to help struggling homeowners avoid foreclosures in April 2009, including the Home Affordable …
Nearly 50 percent leave Obama mortgage-aid program The program is intended to help those at risk of foreclosure by lowering their monthly mortgage payments. Friday’s report from the Treasury Department …
Nearly half leave mortgage-aid plan … enrolled in the Obama administration’s flagship mortgage-relief program have fallen out. The program is intended to help those at risk of foreclosure by …
State-Based Efforts On Housing Crisis Hoped To Better The Number Of Foreclosures New state-based efforts on helping the housing crisis and minimizing foreclosures are being implemented by the Obama administration. …
Nearly 50 Percent Leave Obama Mortgage-Aid Program The program is intended to help those at risk of foreclosure by lowering their monthly mortgage payments. Friday’s report from the Treasury Department …
AP Real Estate Writer Alan Zibel in Washington and Alex Veiga in Los Angeles contributed to this report.
Regarding Bush. Time Magazine does put him at blame for the crisis that Obama has had to endure (quoted below). 50%+ have been helped is great news. Did you expect 100%? The glass is half full, not half empty. Be grateful. Of course after the credit plan ended there would be a drop off in purchases. If you look at the stats the purchases during those “credit” months beat previous years purchases by a tremendous amount. And I mean tremendous. For instance, Milwaukee was up 36% in April alone with 2 more months of increased housing purchases.
Naturally any company that provides coupons gets higher business in those months and subsequent drops occur. July was the first month so naturally there was a drop. Wait a couple of months and check the stats. They are likely to return to normal stasis. Do you not understand anything about business and how incentives boost purchases only to have them decrease in the first month after the incentive is removed. Basic business. As well, not everyone can be helped because they do make enough money already to support their mortgage, or they Do Not have a stable source of income at even the lower rates offered. (I’m not saying the plan was perfect though as I had friends that spent way to much time on the phone and deserved even a slight momentary break which they didn’t get.) That doesn’t make the whole plan a failure though. That’s just people throwing their anger around for political reasons.
Time Magazine: Re: Who is to Blame For the Financial Crisis:
“From the start, Bush embraced a governing philosophy of deregulation. That trickled down to federal oversight agencies, which in turn eased off on banks and mortgage brokers. Bush did push early on for tighter controls over Fannie Mae and Freddie Mac, but he failed to move Congress. After the Enron scandal, Bush backed and signed the aggressively regulatory Sarbanes-Oxley Act. But SEC head William Donaldson tried to boost regulation of mutual and hedge funds, he was blocked by Bush’s advisers at the White House as well as other powerful Republicans and quit. Plus, let’s face it, the meltdown happened on Bush’s watch.”
Michelle..I learned a long time ago not to engage with those whose ideology was based upon what they feel about George Bush. We obviously have a fundamental break and as such, our conversation would be pointless. I’m an unashamed Capitalist and you’re obviously a liberal. We’re not going to change that on a blog.
You are free to get behind any platform that you choose. If you think Obama is doing a good job then I’m happy for you. Guess we’ll see what happens in November. And if Glenn Beck’s rally was any indication, we’ll hopefully be getting back on track…thank God!!
Year 2008: Job losses 2.6 million. War with Iraq based on what? WMD’s? Barry where are the WMD’s? Did they ever turn up? Its called an illegal war.
Voters: Barack Obama wins and is continuing to work “openly” hard to help Americans. He even admits where has fallen short and needs to secure better resources to help the public.
Lets face it, Beck gets paid to entertain and its big money. That’s all. (link supressed)
“In a 2010 interview in Forbes, Beck asserted that his business was not political, but is an entertainment company: “I could give a flying crap about the political process,” continuing on to say that Mercury Radio Arts, his production company, is “an entertainment company”.”
I’m sure you and that Hateful Anti-Gay, Catholic Bashing, Armageddon fearing John Hagee can sit behind your Beck while he entertains you and takes your money. I suppose you think that God smashed New Orleans because of the Gays. Beck was a loser before his association with Hagee but he secures it even more by allowing him to sit in on his rally of 100,000-200,000 (at very most). Obama had 1.8 million.
I already have honor for my Country. I respect and admire our troops. I believe that slowly we are in a state of change that will help the American public. Its a painful change but one that was brought originally by the failed administration that promoted this false sense of “Own the biggest house you can get ownership” which really just took their money, gave it to the rich, and near crippled this country.
Stop with the “Complete Flop” rhetoric only 2 months after the tax credit program ended. Give it a little time before you start bashing.
mmmmmmmmkay…..I see where this is going. Hey Michelle…it was fun..but gotta go! Somebody just sounded the Cuckoo alert.