Timothy Geithner happy with Mortgage Modifications Program…are you?

You may have benefited from the government’s Mortgage Modification Program and be very happy or are you? It appears that many of these modified loans are, in essence, short term (3) years to be exact, with a bubble of their own to pop, increasing the loan to an inflated amount, sound familiar? “Matt Harvey, a mortgage-counseling supervisor at Take Charge America focuses exclusively on modifications in Arizona and has helped more than 100 owners save their homes. However, Harvey cautions that translates to only one success for every five applications.” AZ Republic, November 29, 09. Referring to one of the firm’s success stories in Arizona Harvey says this about his client “difficulties stemmed from having her original loans adjusted to a higher interest rate with no ability to refinance when the credit crunch materialized. Her new loan also will adjust, after three years, but that gives her time to move or refinance.”

This leaves the question has to just how much good this Obama administration ‘ Mortgage Modifications Program’ or ‘Making Home Affordable Programs’ are doing? I am glad for those who have staved off the loss of a home, been there once many a moons ago myself. But for many, if not most seemly is a temporary fix, creating another bubble three-five years down the road.  I hope, I am wrong. Let’s not forget that nearly one million homes have been foreclosed on and repossessed by banks in 2009. Where was the immediate assistance promised by President Obama campaigning in 2008 “I’ll put a three-month moratorium on foreclosures so that we give homeowners the breathing room they need to get back on their feet.” Sources: Speech, Richmond, Va., Oct. 22, 2008

Let’s take some simple numbers and a short example, that is reflective of the nation. Tim Geithner is quoted as saying Sunday 2/7/10 “This program is providing very, very substantial cash flow relief right now to more than 750,000 Americans. And we believe we’re still on a path to be able to reach many, many more American households. And of course, we’re going to make sure that those temporary modifications translate into permanent modifications,” he told ABC’s “This Week. “We’re absolutely committed to make sure that translates into what we said it would, which is for eligible Americans, they’re getting permanent modifications that substantially lower their monthly payment,” he added. Under the $75 billion mortgage modification plan, called the Making Homes Affordable program, President Obama  last year pledged that lenders who participated would be required to reduce payments to no more than 31 percent of a borrower’s income, enabling as many as 3 million to 4 million homeowners to modify the terms of their mortgages to avoid foreclosure.” report Fox News

Geithner admits only 66,000 homeowners nationally have been helped at this time…good for them, bad for the other 1-2 million stranded after losing their homes since the mortgage bubble busted in 08-09′s fiscal years. Neither President Bush or President Obama had, or has done enough to stop or prevent a foreclosure avalanche. The Arizona Republic newspaper reported at the end of November last year, that 34,000 homeowner mortgage modifications were in the works. Good, if they are ever completed, but the numbers show, that only 1 in 5 will be approved, and that Arizona finished 2009 with more than 163,000 foreclosure notices sent out to homeowners. So roughly, less than 20% of homeowners in Arizona needing assistance from foreclosure may not or will not get the help promised by the Obama administration.

Homeowners got promises in words, not much in deeds done. Banks, particular the main stream larger institutions are as culpable as the Fed.. Hesitant to any kind of a freeze on home foreclosures and incandescent with the Administration’s chastising and dictatorial takeover of the banking industry (So to Speak) that there has been a deliberate slow down in reducing or stopping the number of foreclosures and actual repossessions in 2009. 2010 will be the same, unless President Obama can better work with the Banking Industry, starting with getting out of its business matters, but that is another topic altogether.

I’m Dr. Quack…with the harsh cry of reason….2 08 10

Phoenix Business Journal, AZ Republic