Out today from the Associated Press, almost half of those enrolled in President Obama’s highly touted mortgage relief program have been let go or dropped out.
Excerpts from the story in The San Francisco Gate:
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.“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.com’s Analytics.
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 those who had enrolled since March 2009. And it is up from more than 40 percent through June.
An additional 421,804, or roughly 32 percent of those who started the program, have received permanent loan modifications and are making their payments on time.
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. (emphasis mine)
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.
Whatever the reasons, it looks the mortgage relief program is turning into one big “clusterfark” and leaving many in the same situation they started.