Borrowers exit troubled Obama mortgage program

[Freddie Stubbs]

Source: Associated Press

WASHINGTON -- The Obama administration's flagship effort to help people in danger of losing their homes is falling flat.

More than a third of the 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out. That's more than the 27 percent who have managed to have their loan payments reduced to help them keep their homes.

Last month alone, 150,000 borrowers left the program - bringing the total to 436,000 who have exited since it began in March 2009.

Administration officials say borrowers will get help in other ways. But analysts fear the majority will still wind up in foreclosure.


Read more: http://www.miamiherald.com/2010/06/21/1692092/more-borrowers-exit-obama-mortgage.html

[robinlynne]

1. hang on. why did they drop out? the title suggests it is the program's fault.

[tridim]

2. Actually the title suggests it's Obama's fault

Which is so typical of our "Liberal" media these days. Everything is Obama's fault. Everything.

[Stinky The Clown]

6. The title suggest there's a troubled program. That seems factual enough.

The title connects the program to the Obama administration, which is probably correct.

I haven't read the article, so I cannot pass any judgment on whether the fact that Obama's program is troubled is his fault or not. I think saying the title implies it is Obama's fault is more about your personal filters and biases than anything the title of the article said.

Again, I am not saying the article is right or wrong. I didn't read it and am therefore not qualified to know. But the title gives nothing away.


Unless you want it to.

[papadog]

14. Stinky if you haven't read it why are you commenting?

The headline is an attention grabber, that's all. The article implies people are dropping out because they don't need it having made other arrangements. Yay for that. Not Obama's fault, maybe even to his credit.

[Stinky The Clown]

16. No 1: Why do you care what I wrote to a person who is not you? Don't be a busybody.

No 2: What I wrote was about the article title, which, as I point out, was not misleading.

No 3, what I wrote was in direct response to what was written by another poster who was, in my view, wrong in their assertion. I made my points. You are free to disagree with them. I have NO obligation to tell YOU why I chose to reply as I did because it is none of YOUR business.

Do you have anything else to ask about? I'm happy to accommodate.

[robinlynne]

22. could be people are exiting because they lost their jobs and dont have money to pay a mortgage.

[zipplewrath]

3. Depends upon what you consider "fault"

A major reason so many have fallen out of the program is the Obama administration initially pressured banks 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.

Many borrowers complained that the banks lost their documents. The industry said borrowers weren't sending back the necessary paperwork.

Treasury officials have directed lenders to shift to a new system. They are now required to collect two recent pay stubs at the start of the process. Borrowers have to give the Internal Revenue Service permission to provide their most recent tax returns to lenders.

The growing number of people leaving the program could lead to a new wave of foreclosures. If that happens, it could weaken the housing market and hold back the broader economic recovery.

Most of those leaving the program were rejected during a trial period lasting at least three months. More than 6,300 dropped out after having their loans modified.

Another 340,000 homeowners, or 27 percent of those who started the program, have received permanent loan modifications and are making payments on time.

Experts say more borrowers are likely to drop out in the coming months. Some homeowners who owe more on their loans than their properties are worth are likely to conclude that paying an oversized mortgage simply isn't worth the cost.

Even after their loans are modified, many borrowers are simply stuck with too much debt - from car loans to home equity loans to credit cards.

"The majority of these modifications aren't going to be successful," said Wayne Yamano, vice president of John Burns Real Estate Consulting, a research firm in Irvine, Calif. "Even after the permanent modification, you're still looking at a very high debt burden."

Different ways to look at this. The program was designed to help a small percentage of people.
Alternately, people who entered were more likely to be beyond help.
Or, there isn't going to be enough modification to make the debt worth keeping.

[Stinky The Clown]

5. I wonder if reading the linked article would clear that up.

[xchrom]

4. Recommend

[JuniperLea]

7. How many applied that were nowhere near eligible?

I would expect far more than a third to drop out based on eligibility.

[wroberts189]

8. They offered me a .20 percent drop and full reset of the 30 year loan.

Once I realized the loan would be reset another 5 years I said forget it.

Add 5 years to my mortgage plus a lot more interest money to save $99.68 per month.

I came under the program for those who are not behind but are struggling..


on edit 5.5 % fixed ..good credit but high debt ratio.

[w4rma]

9. DLC and banksters probably watered it down to the point that it's nearly worthless. (nt)

[deadinsider]

10. Could be or...

it could have been designed with a way too optimistic viewpoint. They could have been thinking it would help out many more than what it actually is...

Then again: any adjustment to the interest, whether rate or length of loan, would certainly be something the banksters and DLC members would not frown at.

[Daveparts still]

11. Here is the Problem

The banks are in charge of the program, the banks get paid $1,500 to a maximum of $2,000 to do a loan modification. If the home goes into foreclosure the bank can take the deed to the FDIC where it will be reimbursed for the amount of their loss.

The FDIC then holds an auction and sells these properties on average for 40 cents on the dollar.
Anyone want to take a guess who is buying them? The same banks and REITS. You buy a $200,000 home with fifty thousand down you pay ten thousand and then go into foreclosure. The bank takes the deed to FDIC and is reimbursed for $140,000 then they go to the auction and buy the house back for $80,000 plus Obama pays $3,000 to move the suckers out so the banks can find nice tenants to rent these homes.

It is a wealth transfer, two thirds of all wealth in America is in Real Estate. When you read that there will be 4.5 million home foreclosures this year that is a huge wealth transfer from private individuals to corporate banking.

The banks can buy the homes from the FDIC for zero percent down and zero percent interest plus the FDIC promises if the banks don't make a profit they'll lower the price! The program is no different that putting Al Capone in charge of Alcohol, Tobacco and firearms.

[Bo]

18. Very well written, and very true.

The banksters are making out like gangsters. They will NOT lower purchase price so this program is worthless.

[Missy Vixen]

20. Our experience with Making Home Affordable

My husband lost his job in November of '09. We applied to the program three days after it was announced, which was March of '09. Our application was not processed until August of '09. We were living on unemployment, we'd exhausted any severance monies we received, and we were one month behind. My husband also started a contracting job in August of '09.

Our three-month trial period ended in November of '09. We called our lender to ask where our loan docs were; we were told we'd have them by "the end of the year". We called our lender again in December of '09 and were told that there were "not enough people" to generate loan docs for "50,000" applications ahead of us, and we would have to submit to an additional three-month trial period. I might mention that there were two stories in the news within a week of our call to our lender of the same lender selling houses right out from under those who were either fulfilling the trial payment period of a MHA loan modification, or one homeowner that had been told she successfully completed the program, waiting for docs, and someone knocked on her door one day and introduced themselves as the new homeowner. They bought her house at auction.

We called Senator Patty Murray's office in DC that same day, December 28th.

To my shock, her chief of staff called us less than 24 hours later. We are just two constituents, not rich, not powerful, and certainly not huge donors. He asked me what happened, I explained, and he listened. He asked me if there was anything we needed or anyone he needed to call on the spot -- in other words, "Are you okay? They haven't shown up with foreclosure papers or anything like that, right?" He told me, "We will help you." He gave me his personal cell number, and told me to use it if we had questions or problems before the Senator and her staff were back from the holiday break.

There is a woman in Senator Murray's office (thanks, Mary!) that has done nothing but work with people applying to Making Home Affordable (and getting the same runaround we did; I could go on all day about "lost" paperwork, paperwork that didn't show up, one department that didn't have the paperwork they needed and it all had to be submitted again, CSR's who "couldn't find the file", on and on and on,)for the past year. FOUR PERCENT of those who applied to the above program actually made it to the final docs. Please re-read that statistic: FOUR PERCENT.

I would like to thank Daveparts still for his/her comments; they are absolutely accurate. Most lenders sat on MHA applications because they knew they would get paid even if the house went into foreclosure. The only people who actually made it out with any kind of loan modification did so because they would not give up until they got one.

Our loan modification docs showed up in the mail before we got a letter from the CEO of our mortgage lender acknowledging he talked with Senator Murray personally about our file and our loan modification. We also got a letter from Senator Murray which I am considering framing.

We are grateful to still be in our house and able to make the payments. We are not so thrilled with the fact the program itself was so full of loopholes and lack of any kind of punitive regs for lenders, most of them sat back, collected money, and hundreds of thousands of homeowners were unable to take advantage of a highly-touted program.

Most of all, I am thankful to live in the state Patty Murray serves. I don't know what we would have done without her, her staff, and the fact she doesn't give up, either.

[Plummer74]

12. Borrowers exit troubled Obama mortgage program

The reason everyone is leaving because the the plan is
unregulated.

The plan sets you up for failure.

You get a reduced payment for 3 months.

After 3 months they make you wait (in my case 7 months) with
no answers or feedback unless you call them, then they still
don't give you answers. 

I was denied because I made all of my payments and they felt
that i could afford my morgage. Well, the rules of the plan is
that you have to make all of your trial payments. They want to
get you into foreclosure. They don't want to help anybody.
They will make more money if they foreclose on a house then
help the customer.  

After they deny you from the program you have to pay back the
money that is owed in full. But, in the meantime thye report
you to teh credit agencies and start forecloser process. 

The banks also then say wait 12 weeks and we will get a
repayment plan for the balance owed for the reduced payments
and don't pay your mortgage in the meantime. I glad i did not
fall for that.

The banks are only willing to help if they know the roperty is
worth more not to foreclose on it then to foreclose on it. 

The program may sound good but since there is no regulation,
the banks are doing what they want. 

Didn't we bail them out. 

DOUBLE DIP HOUSING RECESSION IS COMING. ALL THE PEOPLE THAT
THINK THE BANKS ARE GOING TO HELP THEM ARE IN FOR A SHOCK WHEN
THE BANKS FORECLOSE ON THEM. THEN THE BANKS ARE GOING TO ASK
FOR MORE MONEY. 

[Dappleganger]

23. Excellent first post...

and welcome to DU!! :hi:

You're absolutely right on about the program not being regulated; the banks did whatever they wanted as is their usual MO and then pretended they were "trying to help customers." When in fact, those customers were being given the short-shaft all along at the pleasure of the banks.

Fuck 'em!!!

[corpseratemedia]

30. there are a lot of people who've had your experience

they get a trial modification under the program and then get rejected because they made their payments (!!)



and when the banks do this bs with "not getting stuff in the mail" or "mailed to the wrong dept" or "lost," no individual could use that excuse





...only banks could get away with this orchestrated theft

[MsFlorida]

13. Hooray Obama!!

I am one of those that was benefited by the modification program -- one of the 27 percent.

Just for the record, I'm a single parent with college age kids, that had my hours cut where I am employed. Was just incredible what was done for me. I am ever so grateful.

My mortgate company went out of their way to help.

[deadinsider]

15. Good for you; but what about everyone else?

That is the question. The program was meant to help you, but also others.

It seems some are falling between the cracks. Imagine if you were one of them.

[cstanleytech]

19. Well they are probably SOL.

Its sad that the program could not help everyone out of whatever mess they are in but thankfully some have been helped, could the program be improved to help more? Perhaps but I don't see how myself.

[high density]

21. The program is helping many people

It's not helping everybody.

The bottom line is that you shouldn't buy stuff that you can't afford. Some people have housing arrangements that simply aren't sustainable at their income level.

[Dappleganger]

25. What????

"The bottom line is that you shouldn't buy stuff that you can't afford."

Please better explain this line of thinking as it sounds as if you are trying to blame the borrower for the real estate bubble and the massive job layoffs which many in this nation have gone through and are still enduring, through NO FAULT OF THEIR OWN.

[high density]

28. I am certainly blaming people who put down phony income amounts to purchase the home they wanted.

Home ownership isn't forced on anybody.

[Dappleganger]

29. Which people put down phony incomes...

and show me how THIS is to blame for the mass percentage of foreclosures?? Show me also how this is not considered fraudulent on the part of the LENDER.

I cannot believe that you are placing blame on the victims, that is so, so.... :banghead: :banghead: :banghead:

[Dappleganger]

24. I'm glad it helped you.

Quite frankly I've not read of many who have been actually helped so it's good to see the other side of the coin.

Welcome to DU, btw! :hi:

[Bo]

17. Homes were completely over valued, lower the Purchase Price.

They only modify the loan payment but the Property is still over valued 30 to'60%. I would walk away as well no way will homes ever regain 2005 prices.

[Dappleganger]

26. I highly doubt that this area of FL will ever see

those gains for at least another two decades, possibly longer.

[depakid]

27. Should have listened to economists like Dean Baker and enacted "right to rent."

yet another of the myriad policy failures of this center right administration.