Modifications,Short Sales,Deeds in Lieu,WriteDowns

Why Mods Arent Working

Posted on Tuesday, January 5, 2010

We were originally promised MHA HAMP would save 5 million homes (this was lowered to a promise that 500K applications would be processed by November - no mention of any homes actuallybeing saved). So far about 50K people have recevied permaant mods. Of those, as many as 50% may redefault, making the eventualy price tage per actual successfull mod huge!

The biggest success MHA has seen is in promoting the Administration. The program is advertisied in movie theatres, on high way billboards and all over the Internet. In truth, even the name Making Homes Affordable is a misnomer - how can you possibly make a $450K McMansion affordable for a taxicab driver earning 12K a year??? Maybe I missed to magic wand provision on the final draft? Wasnt that this ill founded tought that got us in this mess in the first place? Even if you can lower the mortgage payment (albeit temporarily), what about real estate taxes, insurance, utilities? Isnt that homeowner really better off moving on asap and beginning to rebuild his or her life?

This is a shared responsibility; govnerment naively rolled out a premature, somewhat naive plan before the problmes had been fully identified and the operational challnages appreciated. Banks are still approaching this with and old attitude that s like putting a square peg into a round hole. And they're no where near up to speed to get the task done...perhaps a true sign to government that they just dont want to? And even borrowers are still unrealistic and ill-prepared. That paperwork has got to be subnmitted and less than 2% of all mods involve a principal reduction. The bailout mentality can also be an embarrassement. MHA is for people who really cant afford their payment now but probably can with some tweaking. Borrowers who will never be able to afford the home and those who can afford their paynment as it is but are just hoping to cash in on a reduction need to stop clogging the pipelines.

We need to get this right before those option ARMS start adjusting.


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