Foreclosures rise as Obama’s mortgage modification program falters

By Sahil Kapur
Thursday, June 9, 2011 13:40 EDT
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WASHINGTON – Two years after the start of President Barack Obama’s program to help struggling homeowners stay in their homes, millions of Americans remain far behind on their mortgage payments and are scrambling for other options.

The Home Affordable Modification Program (or HAMP) seems to have had little success. CNN reported Thursday that 4.2 million homeowners are “seriously delinquent” on their mortgages or are pursue legal avenues on foreclosure auctions. Two in three haven’t made a single payment in over a year.

Two million Americans are currently in or facing the prospect of foreclosure, according to CBS News.

“The president had bailed out the big banks, and now the big banks don’t wanna bail out the little people,” Donnie Hines, one of those two million, told CBS.

In March, TARP inspector general Neil Barofsky testified before Congress that HAMP was “clearly a failure,” saying there was “universal and bipartisan agreement that the HAMP program is failing to meet TARP’s goal of preserving homeownership.” That was the month when House Republicans attempted to axe the program.

The program — which has had some successes — has been marred by limited refinancing options, strict eligibility requirements, complicated bank schemes and the need for participants to navigate a bureaucratic maze that some give up on early.

Others have faced surprising new twists in refinancing deals. A Panama City woman saw interest rates on her new mortgage suddenly rise, forcing her to attempt adjustments — mostly in vain, she told the News Herald, as they’ve been constantly rejected by her loan servicer. Seventy-year-old Lindsay Hall now faces the threat of foreclosure on a home she’s owned since 1970.

In an attempt to improve services, the Treasury Department has begun to withhold incentive payments from three major mortgage-providing banks — Wells Fargo, Bank of America and J.P. Morgan — while demanding better performance, according to The American Banker.

Home foreclosures were at the epicenter of the economic crisis that began in 2008, partly due to an exploding housing bubble, and has continued to plague middle class Americans. With the economy still struggling and the unemployment rate high, millions have been forced out of their homes in recent years.

Photo credit: Creative Commons

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