No intention tackling 10/12 million foreclosures over the next three years

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

Nearly 1 in 3 homeowners (with a mortgage) under water (vlgs Moody).
Only goal is assisting 3 million to 4 million struggling homeowners.

Dus huizen blijven goedkoop in de USA voor de voorzienbare toekomst!
En tentenkampen blijven groeien de komende jaren.

Groet / Cees

http://www.usatoday.com/money/economy/housing/2010-03-25-obama-mortgage-loan-plan_N.htm
After months of criticism that it hasn't done enough to prevent
foreclosures, the Obama administration is announcing a plan to reduce
the amount some troubled borrowers owe on their home loans.
The effort will let people who owe more on their mortgages than their
properties are worth get new loans backed by the Federal Housing
Administration, a government agency that insures home loans against default.
That would be funded by $14 billion from the administration's existing
$75 billion foreclosure-prevention program. In addition, the homeowner's
existing mortgage company will get incentives to lower the principal
balances on underwater loans.

READ: Friday's announcement
GROWING PROBLEM: Underwater mortgages drain equity, dampen retirement
NOT SO FAST: Walking away from a mortgage has consequences
LOWERING PRINCIPAL: Bank of America gives 45,000 borrowers a break

The plan, announced Friday, would also enable the borrowers' existing
mortgage companies to receive incentives to lower their principal balances.
To be eligible for the FHA refinancing program, borrowers who owe more
than the value of their homes, known as being "under water," must not
have fallen behind on their existing mortgage payments.
Separately, the program also would reduce monthly payments for
unemployed homeowners for up to six months.

The administration cautioned that the plan isn't intended to stop all
foreclosures or assist all troubled homeowners.
"There's no intention here of tackling what may be 10 to 12 million
foreclosures over the course of the next three years," said Diana
Farrell, a White House economic adviser.
Instead, officials said, the goal is to make it more likely the
administration will meet its original target, announced last year, of
assisting 3 million to 4 million struggling homeowners.
That would be "enough to provide help to those for whom help is
worthwhile ... and to provide some kind of stability in the market."

The plan won't assist investors and speculators or "Americans living in
million dollar homes or defaulters on vacation homes," an administration
fact sheet said.
Some homeowners will not be able to afford to stay in their homes
because they bought more than they could afford, officials said.
To help borrowers who have been hurt by falling home prices, the
government also will require mortgage servicers to consider cutting a
loan's principal if it is up to 15% more than the home is worth,
officials said.

The principal would be reduced over three years as long as the borrower
stays current on payments.
In addition, servicers will get more incentives — double the amount the
government now pays to lenders — if they reduce the unpaid balance of
second loans.
The changes reflect a new attack by the Obama administration to address
the foreclosure crisis, which at first was driven by subprime mortgages
going delinquent, and now is being fueled by unemployment.

The current program provides modified mortgages to homeowners who show
proof of income.
"The cost is going to depend on the participation rate. In terms of the
cost to taxpayers, the cost of not doing something is greater than doing
something," says Scott Talbott, senior vice president for government
affairs at the Financial Services Roundtable. "Up to now, there was no
government program to help the unemployed, and that was the biggest
problem."
The federal program, known as the Home Affordable Modification Program
(HAMP), is aimed at helping up to 4 million Americans avoid foreclosure.
So far, about 170,000 homeowners have been granted permanent
modifications with lower monthly payments through the plan.

Also Thursday, the Treasury Department announced new measures that buy
time for some borrowers to avoid losing their homes to foreclosure.
Lenders soon will be unable to start foreclosures unless they've
determined borrowers aren't eligible for a modification.
Other changes announced Thursday will provide other protections for
troubled homeowners. They include:
•Ensuring servicers intervene once two or more mortgage payments are
missed and actively solicit borrowers for the federal program.
•Setting a 30-day deadline for lenders to decide applications for trial
modifications.
•Requiring servicers to consider borrowers who file for bankruptcy-court
protection for the HAMP program if the borrower, their lawyer or
bankruptcy trustee make a request.

The four big holders of second mortgages —Citigroup, Bank of America,
Wells Fargo and JPMorgan Chase — have now joined the government's
program to modify second mortgages. That program was delayed for months
but with Citi on board, the major players in the industry are now
participating.

Critics have complained that the Obama administration has done little
until now to encourage banks to cut borrowers' principal balances on
their primary loans. Nearly one in every three homeowners with a
mortgage are "under water" — they owe more than their property is worth
— according to Moody's Economy.com

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