There seems to be no apparent bright light at the end of this mortgage fiasco tunnel as Washington’s loan modification program failed miserably according to St Louis loan modification and reduction specialists.
Approximately 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out or been kicked out as it were.
Out of the millions who have needed assistance, only 339,000 have been upgraded to a permanent loan modification plain.
Officials in the White House are sticking by guns when saying that the Obama administration has helped the housing market in many ways.
Comments by politicians say that these large number of homeowners who were rejected from government programs will in some way get help in other ways. That’s pretty optimistic since their programs have failed Americans over and over again. Many are now seeking principal reduction specialists to provide assistance.
But St Louis home loan analysts expect the majority of these individuals will still wind up in foreclosure which will inevitably slow the promised economic recovery.
What some people don’t understand is that when this loan modification program was introduced, the Obama administration initially pressured banks to sign up borrowers without insisting first on providing proof of their income.
In time, banks were required to get this information from the thousands who had already qualified for help. Most were now disqualified or voluntarily dropped out knowing they would now be turned down.
Then came the biggest mortgage red tape bureaucracy in history. Thousands of borrowers were complaining that the banks were losing their documents. On the other side, banks said borrowers were not sending back their paperwork at all or were improperly filled out. Guess who won.
But this only gets worse. There have been thousands of homeowners who vigilantly made their home payments on time but were still removed from the federal assistance programs.
Many real estate lawyers say that more banks made such inexcusable mistakes largely due to incompetence.
Changes were indeed necessary. The treasury department now requires banks to get two recent pay stubs to initiate loan modification processing.
Banks and servicers now have the right to ascertain the most recent tax returns from individuals who seek federal foreclosure prevention assistance.
This no doubt had an affect on the number of applicants. There were over 100,000 monthly applicants in the summer of 2009 compared to only 30,000 in May 2010.
Thus, as more people exit these loan bailout programs, this results in a new wave of foreclosures. Once again this would have an adverse toll on the housing market.
So, now the homeowner is faced with insurmountable debts and with the new projection that approximately 67 percent of borrowers with permanent modifications will now default once again within 12 months after modification, this is very bad news for our economy.
New data is showing that about 49 percent or more of consumers who dropped out of these programs in April 2010 received some type of alternative loan modification from their lender.
Thus, more and more banks are using short sale processing for their clients if for nothing else out of necessity.
Most professionals say a homeowner will take a less severe hit on their credit report and will definitely help the home market prices for less than stellar neighborhoods.
More and more banks are running cash-for-keys programs where consumers voluntarily leave their home in good shape and many are helped by the bank with some moving expenses.
This whole federal bailout process has brought more disappointment and discouraging reports for homeowners who had realistic hopes of saving their homes.
The St Louis foreclosure-prevention program has had minimal impact according to many national consumer groups.
It is sad that they didn’t put the same amount of resources into helping families avoid foreclosure as they did helping banks.
To learn more about a St Louis mortgage, stop by Floyd J. Tapia’s site at www.libertylendingconsultants.com/St_Louis_Home_Loans. Principal Reduction Program St Louis: Better than loan mods. Save your home by stopping foreclosure. Helps if you are underwater. Call us at 314-334-0210 or 877-334-0210.