51 Another Barak Hussien Obama program Flops
Nearly 50 percent leave Obama mortgage-aid program
Obama mortgage-aid effort is struggling to stem the rising number of foreclosures in US
FILE – In this file photo taken July 21, 2010, a “bank owned” sign is seen on a home that is listed as a foreclosure on a HUD website, in Hawthorne, Calif. Nearly half of the homeowners who enrolled in the Obama administration’s flagship mortgage-relief program have fallen out. (AP Photo/Reed Saxon, file)
Martin Crutsinger, AP Economics Writer, On Friday August 20, 2010, 10:18 pm EDT
WASHINGTON (AP) — Nearly half of the 1.3 million homeowners who 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 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.
AP Real Estate Writer Alan Zibel in Washington and Alex Veiga in Los Angeles contributed to this report.
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Christine S
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Christine S 54 seconds ago Report Abuse
Some of these posts make me sick. I am a homeowner facing certain foreclosure. Did I buy a home I could afford? Yes – in fact, well below what I was approved for. Did I have savings for a cushion should something go wrong? Yes. Did I unexpectedly lose my job, and therefore 75% of my income? Yes. Was I able to find a new job quickly? NO. Do I expect a handout? No. Do I expect my mortgage company to work with me (i.e. NOT give me a handout, but simply work with me until I overcome this hurdle)? YES. When my world started crashing down around my head the first thing I did was call my mortgager. They said ‘call us back when you’re 3 months behind’. I blew through my savings inside of 6 months trying to keep things paid and on time. Once that was gone and I became 3 months behind I called them back and asked to be included in the Obama mortgage program. Their response to me was ‘we will run you through every single other option we have before we will even consider that program’. In the meantime, I have received very little communication from the bank, they will not answer questions and the whole process has been dragged out for more than 2 years now. They will not accept ANY money from us. They say ‘all or nothing’. They will not allow us to send money to them to chip away at our past due balance, period. They send it back. Now we are over $10,000 behind. This is one of the banks that received MY tax dollars to keep them from drowning, YET here I am drowning and not only are they not helping us, they have their foot on our head holding us under water. NOT EVERYONE HAS BEEN IRRESPONSIBLE. Some of us have lost income and jobs and that is the only reason for the default, and unfortunately for us, the hardest part to overcome!!
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Rick LV
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Rick LV 2 minutes ago Report Abuse
Obama’s plans to fix this country can NEVER work because his plans always involve some form of socialism. Only diehard, left wing liberal fools who will support Saint Obama no matter what he does are so blind as to not see that socialist-style economic systems never work.
Think about this. What works better for an individual (and for the government), having someone knock on your door every day so you can “compassionately” give them free food to eat (as liberals do), or… helping someone become self-sufficient so they don’t have to rely on you for their daily meals?
Democrats are the masters of creating and enviroment of “compassionate” dependance on them. Republicans want to create an environment of self-sufficent prosperity. Lately, the Republicans have forgotten their basic principles but this really is the core difference between the two parties.
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Jim Jones
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Jim Jones 3 minutes ago Report Abuse
Here is a word for YAHOO,,, Moral Turpitude,,relating to NoBama. , Yahoo doesn’t like the word..for it reflects on the Nobama. lol
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Sutcliffe_1975
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Sutcliffe_1975 4 minutes ago Report Abuse
@ Murphy:
WOW!!! That’s one hell of a job trying to rewrite history! You must actually believe Failin’ Palin’s incoherent thoughts.
There is NO question that the accelerated foreclosures, economic collapse, and recession began while W. was still in the White House. Does ANYBODY remember TARP?!? You know the money lent to financial institutions to keep them afloat? It DOES have W.’s signature on it.
But in reality, it wasn’t even W.’s fault that the collapse occured. It was ultimately inevitable following decades of decreased oversight and regulations on financial institutions. However, the NEXT financial collapse will PROBABLY be due to the 20 year cost of Obama’s healthcare plan. So if you just save your post for a couple decades, it might actually become valid.
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Daffy
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Daffy 6 minutes ago Report Abuse
I always thought posting comments was stupid, but you know what IT FEELS GOOD, REALLY REALLY GOOD.
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Daffy
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Daffy 8 minutes ago Report Abuse
I’am eating toast and drinking tea. Does that make me a tea bagger?
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marc
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marc 9 minutes ago Report Abuse
you guys are funny with your god stuff,you actually think that all that crap storm happened over night it took decades to screw this nation up, it was happening back in the seventies with the energy crisis that never got solved and the selling of of the nation, how much of america do you think we own, and the people are just loosing their morals turning to adiction to hide from responsability, our education is down and our crime is up,and we get @#$% pay from greedy corporations that are investing their money in other coutries,no president could of cleaned up this mess, it is much more complex than that,america is different now
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Duane
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Duane 10 minutes ago Report Abuse
we need term limits!!!!!!!!!!!!!!!!!
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Daffy
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Daffy 11 minutes ago Report Abuse
Obama has no idea what he is doing. He’s only playing president. But he is destroying America.
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Daffy
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Daffy 13 minutes ago Report Abuse
Thank you Obama for giving the loan/banks lots of money to buy our foreclosed houses. Hope you are happy now. You did make a change