The main loan modification program that was heralded as the best answer for this foreclosure fiasco seems to be now a dud according to St Louis loan experts.
Approximately 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out or been kicked out as it were.
Out of the millions who have needed assistance, only 339,000 have been upgraded to a permanent loan modification plain.
Of course, White House officials are saying the housing market is much better financially than when President Obama entered office.
Comments by politicians say that these large number of homeowners who were rejected from government programs will in some way get help in other ways. That’s pretty optimistic since their programs have failed Americans over and over again. Many are now seeking principal reduction specialists to provide assistance.
But St Louis home loan analysts expect the majority of these individuals will still wind up in foreclosure which will inevitably slow the promised economic recovery.
Some of the failings actually go back to when these programs were introduced. The Obama administration did not insist on proof of income at first. Just sign up as many borrowers as possible.
So, when banks later required that this information be collected, thousands of these distressed homeowners who originally qualified were now disqualified or dropped out due to the administration’s short-sightedness.
Then came the war between the borrowers and the banks. Side A said the banks and their servicers lost their documents. Side B fervently said that these borrowers were not sending back their paperwork or it was not properly filled out. Right or wrong, in the end, the banks won.
But this only gets worse. There have been thousands of homeowners who vigilantly made their home payments on time but were still removed from the federal assistance programs.
Many real estate lawyers say that more banks made such inexcusable mistakes largely due to incompetence.
The U.S. Treasury now requires banks and servicers to get two recent pay check stubs from these individuals although these changes really never helped the confused homeowner.
Banks and servicers now have the right to ascertain the most recent tax returns from individuals who seek federal foreclosure prevention assistance.
This no doubt had an affect on the number of applicants. There were over 100,000 monthly applicants in the summer of 2009 compared to only 30,000 in May 2010.
Thus, as more people exit these loan bailout programs, this results in a new wave of foreclosures. Once again this would have an adverse toll on the housing market.
And if that doesn’t do the householder in, their very high debt burden might. It is now projected that about 67 percent of borrowers with permanent modifications will later default once again within 12 months after getting their home loans modified.
Current data from the Obama administration published recently shows that nearly 50 percent of the borrowers who fell out of the program in April 2010 received an alternative loan modification from their lender.
Thus, more and more banks are using short sale processing for their clients if for nothing else out of necessity.
Most professionals say a homeowner will take a less severe hit on their credit report and will definitely help the home market prices for less than stellar neighborhoods.
Banks in order to avoid high legal and court fees are now allowing homeowners the option to leave their home and turn in their keys. In return they will not have a foreclosure on their credit report.
The end result of this mortgage crisis will undoubtedly speak loudly for many generations. Bad news has been more abundant than good ideas.
Most experts will agree that these St Louis foreclosure-prevention programs have had little positive impact on this slow economy.
No organization; no oversight. This has prevented more families from stopping foreclosure than anything else.
Get a St Louis home loan today. Also visit www.StLouisMortgageGroup.com for a FREE Loan Audit. Loan Modification Programs St Louis: Do they work? Principal Reduction may help you and your business more. Call us at 314-334-0210 or 877-334-0210.
