If someone needs to become a renter, there's nothing wrong about that. It's just life. Unfortunately, we're stuck with the Obama plan, and Nearly 50 percent leave Obama mortgage-aid program
WASHINGTON (AP) -- Nearly half of the homeowners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.
A new report issued Friday by the Treasury Department said that approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the effort have been cut loose through July. That's about 48 percent of the 1.3 million homeowners who had enrolled since March 2009. That is up from more than 40 percent through June.
The report suggests foreclosures could rise in the second half of the year and weaken the ailing housing market, analysts say.
Another 421,804, or 32.3 percent of those who started the program, have received permanent loan modifications and are making their payments on time.
Many borrowers have complained that 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.
The Obama plan was designed to help people in financial trouble by lowering their monthly mortgage payments. Homeowners who qualify can receive an interest rate as low as 2 percent for five years and a longer repayment period.
It still irritates me to no end that a qualified home buy or someone refinancing a home is going to get roughly 4.5% on a 30 year fixed rate mortgage loan, but someone who doesn't qualify for their existing loan can get 2%.
The ratio of drop outs has increased from 40% to 48%, which continues to signal plan failure. All it's really done is stall the national foreclosure process for 6-18 months for some people.
But what no one wants to discuss is the number of people that have successfully revamped their loan through the program that would have been better served not to. That's right, how many of these successful modified home owners are better off as renters because they truly can't afford their mortgage. Renting might have been cheaper in many cases and a better cash flow equation.
Are we not going to see many of these people back in foreclosure in 3-6-12-18 months because they just don't qualify in the long run for traditional financing?
Increased foreclosures? We are already have that: Home Foreclosures Jump to Record Level in United States, No Big Surprise . But yes, we should all expect real estate values to decline by end of 2010 or into 2011. Foreclosures are up and big, real estate demand has slowed dramatically, and nothing has changed on the Main Street economy.
Just math, but I still think real estate is lower by year end/middle of 2011. We already see it happening in AZ: Arizona Reflects Real Estate Weakness
Hope all is well.
J.D. Rosendahl, Rosey