Mortgage Relief Efforts
Yahoo reported an interesting headline about the Obama administration mortgage modification program. What does it mean for homeowners?
According to Alan Sibel, a real estate writer, 1.24 million borrowers enrolled in the program and over one third of the participants dropped out. This number is greater than the number of people who were able to stay in the program, lower their payment and keep their homes. Sibel wrote, "155,000 borrowers left the program" in May. The program had a mission to enable homeowners to lower their monthly payment as originally agreed upon in their mortgage contract. A lower payment should make it easier keep up with the payments in our ill economy. But if a homeowner is not making money at all, or has been out of job for two years or even six months, trying to create money even for a lower payment is impossible. These homeowners also have families to feed, clothe, educate, insure and drive around. With all of this responsibility that cannot be avoided, people are looking at the debt they have and just want to be rid of it and its long-term burden.
What does this mean?
Very simply put, homeowners cannot pay their mortgage bill because many of these homeowners are out of work. People cannot make their payments because they cannot make money. Businesses are not selling their product because buyers do not have money to purchase so businesses can not hire or keep employees. People cannot get approved for loans or lines of credit unless they have money, are making money and meet the standards of various credit checks. As a whole, people have lost their jobs, racked up credit card debt, have lost money in their 401k and cannot get work. When we think of all the things that have happened to our Nation over the last few years it becomes evident that we are on a long road to recovery for job opportunities, lender opportunities and recovery from debt.
With or without a mortgage people need to get around, eat, fund their health, have necessary daily living items: soap, toothpaste, toilet paper etc... How does someone pay for all of this and a mortgage when they cannot get a job? Many borrowers wanted to try the program to stay in their homes rather then foreclose or short sale and lose the money and down payment they did put into the house. But people who needed the relief in the first place, were already desperate and basically grabbed onto one last chance to keep their house. Homeowners either make the money or they don't. No program can negate the need for income and employment. The Unemployment rate rises each month and people are running a race just to get by.
Consumer credit as a whole is affected as people: short sale, foreclose, go bankrupt, lose jobs and miss payments.
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Sources
Author: Alan Sigel, Borrowers exit troubled Obama mortgage program, Yahoo Finance Section, June 21, 2010 http://finance.yahoo.com/news/Borrowers-exit-troubled-Obama-apf-887634101.html?x=0
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