While there has been some progress in dealing with the housing crisis, the foreclosure relief program really hasn’t seemed to work very well. Banks are still foreclosing on homeowner loans and refusing to modify the mortgages for folks who badly need to keep their homes. Millions of Americans are struggling to save their homes from foreclosure and are trapped in very bad situations that they didn’t create. There has been a great deal of misinformation put out by both the government and the financial institutions concerning efforts to give homeowners the badly-needed relief. When you consider that the very institutions causing the foreclosure mess have benefited financially and are now paying out billions in bonuses, their victims have to be both disappointed and frustrated. I can only imagine how a family facing foreclosure must feel when it reads about the banks paying out all of the huge bonuses.
Almost a year into the government’s third program in two years to stop the wave of foreclosures nationwide, it’s being reported that the latest effort is falling far short of its goal. Getting loan modifications even when the government’s guidelines are followed is most difficult. Even after modifications are approved it appears in many cases the banks are still foreclosing. You may recall that the first government-industry joint program (the Hope Now Alliance) was started in October 2007. The $75 billion Home Affordable Modification Program (HAMP), the third effort, was to be the flagship effort to halt the massive wave of foreclosures. The guidelines in HAMP required lenders to try to modify every mortgage before moving to foreclosure. It doesn’t appear that it is working that way.
I really can’t understand why the banks won’t work with homeowners and modify their loans if there is any chance that the homeowners would be able to keep their homes and pay off the modified loan. Banks certainly don’t need to have a huge inventory of foreclosed homes that they can’t sell. Maybe banks working with homeowners are too much of a common sense approach to solving the problem, but I believe it would work in a tremendous number of cases. At least, it would be worth a try.
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