Obama administration revises anti-foreclosure strategy

[cory777]

Source: The Washington Post

By Dina ElBoghdady and Renae Merle
Washington Post Staff Writer
Saturday, March 27, 2010

The Obama administration Friday tried to manage expectations about its newest foreclosure-prevention efforts, while consumer advocates and others who track the housing market praised the initiative but questioned whether it would succeed in curtailing the foreclosure epidemic.

The initiative, announced Friday, expands on the government's marquee foreclosure prevention program, Making Home Affordable. That program was originally expected to reach as many as 4 million borrowers, but it is not on track to help so many.

To reach its goal, the administration is adding tools to help lenders reach struggling borrowers who have lost their jobs or who are "underwater" because home values have plunged and they now owe more than their homes are worth.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2010/03/26/AR2010032604603.html?wprss=rss_business

[Better Today]

1. At first blush and with the few lines you posted this looks good, but then

you read down a bit farther and find this...

In a briefing with reporters Friday, administration officials said the new efforts are not designed to help all troubled borrowers, but rather those who stand the best chance of recovering. That approach, they said, should help further stabilize the housing market and the economy at large.

"We're not going to stop every foreclosure. It wouldn't be fair. It would be too expensive, and it probably wouldn't succeed anyway," said Diana Ferrell, deputy director of the National Economic Council, which advises the president.

The administration's plan, to be implemented over several months, requires lenders to slash jobless borrowers' payments for three to six months, adopting a strategy used by the industry and applying it more broadly.

"The banks simply haven't been doing it as much as they should," said Rep. Barney Frank (D-Mass.), a longtime supporter of this approach. "The unemployed are fully deserving of this help."

Many housing advocates said they appreciated the administration's effort. But some were disappointed that parts hinge on lenders' voluntary participation.

Bold added by me.

Now what I see is another bailout for well to do folks, how are they going to determine who that is currently unemployed is most likely to find employment and have "the best chance of recovering?"

Secondly, its entirely voluntary. As was the last program that according to the article was intended to target 400,000 homeowners but only succeeded with 35. . . .yes, you read that right 35.

This approach is similar to one embraced by another FHA program, launched in late 2008, which managed to refinance only 35 borrowers instead of the 400,000 originally expected.

Well, I was kind of excited about this because I was thinking, y'know after nearly 2 years unemployed, and about to default across the board, a suspension of the loan for six months would've been great, and perhaps if the job market improved, I might just manage to not be days late and dollars short. Now I'm not so sure. How do I prove I have a chance to recover? I can't. For every job I'm qualified for there are 100-150 resumes, and each job is down to requiring BAs, CPAs, and 5 years experience at friggin $30K a year. And some at that level of qualification are actually having to take those jobs if they're "lucky" enough to get one.

So much for my one day of hope.

[TicketyBoo]

2. I don't know if this idea will help,

but banks really don't want to foreclose on houses.

If you can afford to pay just the interest on your loan each month, talk with your lender and see if they are able to do that deal for you until you can get back on your feet.

Depending on the circumstances, they may jump at that offer. It's what I would do.

[FreakinDJ]

3. But the Banks are not willing to do that

right now they rather take the loss to get the loan off the books

[fasttense]

4. Banks really don't want to foreclose on houses????

Oh really?

"Mortgage companies are more likely to foreclose on homeowners than modify their loans because they make more money off foreclosures, argues a new report by a consumer advocacy group."

http://www.huffingtonpost.com/2009/10/21/perverse-incentives-lead_n_328378.html

[TicketyBoo]

8. That article

says "Mortgage companies" are more likely to foreclose.

It also says "homeowners, lenders and investors typically lose money on a foreclosure." So go directly to the lender. Skip the mortgage company (if you can figure out who the lender actually is, and it's not a part of some investment package somewhere in the ether).

Our mortgage is with a local bank. It didn't get sold off to who knows where. If you're in a position like that, and find yourself going under, it's possible to "tread water" by paying interest-only until you can make it back to dry land.

Personally, I believe that part of the economic reform should be outlawing mortgage brokers who make money via commission just by setting up a loan, with no regard as to whether it is actually going to be paid off. If this hadn't been happening, few people would find themselves in deep doo-doo with their mortgages. The incentive was to offer the hugest loan possible in order to maximize their commission on the mortgage. This was a despicable practice, just like the big bonuses on Wall Street are despicable.

[Xenotime]

5. It woudn't take much to force them to comply.

[Cal Carpenter]

6. I was 'helped' by this program

Funny thing is, I didn't need or ask for it, and didn't even realize it until the very end of the process (a couple days before closing).

In January I refinanced to take advantage of lower rates, because my mortgage was at 6.5%.

I was never at risk of missing payments or losing my home. My payment was affordable to me as it was, but I have good credit, I wasn't underwater, and it seemed worth the effort to lower my payment by more than $100 a month. The closing costs will pay for themselves in a little more than a year.

I'm not even sure what the benefit was to me for being in the Making Home Affordable program. Maybe my rate was a quarter point lower than it would have been, maybe it lowered my closing costs a bit, I don't even know.

But I'm counted as one of the 'success stories' of this program and I didn't need any help at all :shrug:

I would much rather this program helped people are are in deep shit than someone like me who makes a modest but livable living...

[Skink]

7. Basically these are the people that could afford to rent there own house if they walked away.

the govenment waited long enough for the people in really bad shape to be foreclosed on. And now what they see is a problem that is more managable.

Sorry if we couldn't help ya before. Although I'd guess a lot of people this helps now weren't the wild speculators that bought homes they could never afford.