Mortgage aid 40 pct leave program despite rescue. Mortgage foreclosures could rise this year because 40 pct of homeowners are leaving Obama’s flagship program. This could weaken an already ailing housing market.
Since March of 2009, nearly 1.3 million homeowners have enrolled in the program. As of last month, about 530,000 borrowers have fallen out of the program. The main reason for the large number in drop outs is due to the Obama administration.
The administration initially pressured banks to sign up borrowers without insisting first on proof of their income. So later when the banks actually collected the information, many troubled homeowners were disqualified and forced to drop out. This only adds to the housing crises.
“The Mortgage Aid Program has created more short sale inventory from people who thought they were going to qualify,” Realestate agent Sean Prescott, RE/MAX Crown Realty in Sebastian Florida (http://seanprescott.remax.com), said in a statement. “Those people are still in a position of needing to sell their homes because they could not afford them,” Prescott added.
However, 390,000 homeowners, who started the program have received permanent loan modifications and are making their payments on time. According to Treasury officials few of these borrowers will wind up in foreclosure. More than 100 participating mortgage companies received taxpayer incentives to reduce payments.
The Obama Plan
This plan was designed to help people in financial trouble by lowering their monthly mortgage payments. Those who qualify can receive an interest rate as low as 2 percent for the first five years and a longer repayment period. This dropped the average monthly payment by about $500 on average.