Posts Tagged ‘government foreclosure’

Is The Government Foreclosure Prevention Program Working?

Friday, March 12th, 2010

Since it started a year ago, nearly 1.1 million borrowers have enrolled in the Obama administration’s foreclosure prevention program, yet only about 170,000 have seen the application process through to completion; meaning only 16% of the 1.1 million have benefited from the program.

Designed to lower the borrower’s monthly payments, the foreclosure prevention program aims to reduce mortgage rates to as low as 2% for 5 years, and extend loan terms to up to 40 years.

For a homeowner to qualify for a permanent loan modification, they must be able to make three payments, provide proof of their income, and write a letter documenting their specific hardship. To date, an estimated 90,000 borrowers have not been able to successfully do this, and have dropped out of the program.

As of last month, a mere 3,900 Las Vegas homeowners had completed the foreclosure prevention program – a bleak statement for a city as hard hit by the foreclosure crisis as it has been.

With a combined 18,000 homeowners receiving permanent modifications, the California areas of Los Angeles and Riverside have received the most help.

To persuade mortgage companies to participate in the administration’s program, the government has set aside $75 billion in subsidies. Less than 1% has been spent.

If things keeping going the way they’re going, the Government program will have a minimal effect on the foreclosure crisis. Analysts are warning that the majority of borrowers will never complete the process, and those who do, could very well fall behind in their payments once again.

Read: Mortgage relief aid reaches few homeowners

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