Litigation

Mortgage Modifications Not Working

By Angel Reyes

The flagship effort by the Obama administration to help people stay in their homes is not working.  Studies note that more than a third of the folks who enrolled in the program have dropped out.  Recently, 150,000 borrowers threw in the towel and left the program.  That number is on top of the almost 300,000 borrowers who left the program in 2009.  Most analysts believe the majority of people who applied for a mortgage modification will eventually end up in foreclosure.  The reasons for this are manifold.  Suffice to say that most borrowers who sought a mortgage modification were struggling with more than just mortgage debt.  Many of those borrowers were facing mountains of other debt such as credit card and auto loans.  Expect another wave of foreclosures as borrowers fall out of the mortgage modification program.  The only silver lining is that once the people who truly can't afford their homes go through the foreclosure process, home prices might stabilize and the economy may indeed turn around. 

Full post as published by Angel Reyes Blog on June 24, 2010 (boomark / email).