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Obama's Foreclosure Aid Needs Aid

Service : Economy
TEHRAN, April 3 (ICANA) – House Republicans have passed legislation four times this year killing the Obama administration's home-loan modification program, with the latest attempt coming just this week.
Sunday, April 03, 2011 11:57:06 PM
Obama's Foreclosure Aid Needs Aid

But the bills have had no chance of becoming law, due to opposition in the Democrat-controlled Senate, even though senators admit the program is badly flawed and has not done enough to assist struggling mortgage holders.

"The banking industry fought us tooth and nail, and we ended up with a program that is failing homeowners," Representative Zoe Lofgren (D-California) told The New York Times. "The administration doesn't give us real enforcement or answers; we just get the old yokey-doke." Allgov

Two years ago, Congress gave the Department of the Treasury $50 billion to operate the Home Assistance Modification Program. The administration insisted then that the effort would benefit three million to four million homeowners in danger of losing their American dream. Allgov

To date only a little more than 600,000 homeowners have received permanent loan modifications, and Treasury officials have spent barely $1 billion of what they were given. Allgov

Treasury officials have not fined any servicers, and the government-controlled company hired by the Treasury to oversee the program has expressed reluctance to crack down on banks. Nytimes

The banks appear to be the biggest culprits in the program's failure. Concluding that in most cases modifying loans is less profitable than just foreclosing. Allgov

Banks conveniently lose paperwork, incorrectly tell homeowners that they must be delinquent to qualify and come up with other creative reasons to reject permanent modifications. Allgov

A review of the loan modification program led the NY Times to conclude that it has been "crippled by weak oversight, conflicts of interest, mind-numbing complexity and poor performance by many participating banks." Allgov

The effort has failed to stanch a wave of foreclosures-225,000 filings in February alone-and a decline in home prices, which have fallen for six consecutive months and are now just barely above their recession low. Nytimes

Interviews with a dozen homeowner applicants in four states reveal a familiar pattern: Banks deny many who, by income and credit scores, appear to qualify. And homeowners end up weighed down by legal fees and facing foreclosure. Nytimes

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