The main loan modification program that was heralded as the best answer for this foreclosure fiasco seems to be now a dud according to St Louis loan experts.
The cash flow rich modification program worth $75 billion has not brought any comfort to consumers as 1.23 million borrowers drop out or are kicked out.
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.
Sad to say, St Louis loan audit experts expect most of these consumers to end up in foreclosure which makes this bad economy worse.
Some of the failings actually go back to when these programs were introduced. The Obama administration did not insist on proof of income at first. Just sign up as many borrowers as possible.
So, when banks later required that this information be collected, thousands of these distressed homeowners who originally qualified were now disqualified or dropped out due to the administration’s short-sightedness.
Then came the war between the borrowers and the banks. Side A said the banks and their servicers lost their documents. Side B fervently said that these borrowers were not sending back their paperwork or it was not properly filled out. Right or wrong, in the end, the banks won.
And to prove how untrustworthy these banks and servicers were, many conscientious homeowners who responsibly paid their home loan were still dropped from these bailout programs.
Many real estate lawyers say that more banks made such inexcusable mistakes largely due to incompetence.
Since then, more changes have evolved. The U.S. Treasury now requires banks to collect two recent pay stubs at the start of the process.
Consumers are also required to give the Internal Revenue Service the right to provide their most recent tax returns to lenders and servicers at their request.
In fact, the number of homeowners who applied in May 2010 was 30,000 compared to the summer of 2009 when more than 100,000 borrowers signed up every month.
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.
But no matter how much debt the homeowner is still carrying, projections tell a grim story that almost 65 percent of borrowers whose loans have been modified will once again default within the next 12 months.
Current data from the Obama administration published recently shows that nearly 50 percent of the borrowers who fell out of the program in April 2010 received an 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.
The consumer will take a less severe hit to their credit report and may be better for communities because homes are less likely to be vandalized or fall into ruins.
The White House has provided a plan to give such homeowners who agree to short sales or voluntarily work with the banks and turn over their keys $3,000 for moving expenses.
This whole federal bailout process has brought more disappointment and discouraging reports for homeowners who had realistic hopes of saving their homes.
There has been little to no positive impact on this underwater housing market afforded by these huge federal bailouts.
No organization; no oversight. This has prevented more families from stopping foreclosure than anything else.
Get a St Louis home loan today. Also visit www.StLouisMortgageGroup.com for a FREE Loan Audit. Loan Modification Programs St Louis: Do they work? Principal Reduction may help you and your business more. Call us at 314-334-0210 or 877-334-0210.