Foreclosure prevention program less successful in Florida

This story from the AP says 650,000 homeowners are enrolled in the Obama administration's foreclosure prevention/mortgage modification program. But Florida has been less successful in attracting candidates to the Making Home Affordable program. Why? Blame the investors:

Launched with great fanfare in March, the plan got off to a weak start, but now nearly 920,000 loan modification offers have been sent to more than 3.2 million eligible homeowners. That works out to 29 percent, up from 15 percent at the end of July.

In California, about 130,000 homeowners have been enrolled in the "Making Home Affordable" loan modification plan, which President Barack Obama unveiled in February. That works out to about 19 percent of the state's homeowners who were either two payments behind or in foreclosure at the end of last month, according to Treasury Department data.

Two other hard-hit states, Arizona and Nevada had similar rates of assistance as California, at 22 percent and 18 percent respectively. Florida, however, was much lower, at 12 percent, possibly because of high numbers of investor-owned properties that don't qualify for the program.

If you'll recall, the program is supposed to guarantee that homeowners current on their mortgage payments pay no more than 31 percent of their incomes toward monthly mortgage payments, including taxes and insurance.

To enroll, however, you have to prove a "hardship" that can include family illness, pay cuts and unemployment, etc. After a 3- or 4 month trial period, during which the bank checks if the homeowner can afford the lowered mortgage payment, the cheaper mortgage becomes more or less permanent.

I think it's a good program, considering the other options. These are people who aren't in foreclosure but fear they're headed that way. But let's not fool ourselves: This is a massive, hugely expensive, long-term subsidy for homeowners who in many cases bought too much house during a period of exuberance.

It's also subject to abuse, but much less so than other programs. Even at the risk of federal penalties, some Tampa Bay homeowners will certainly understate their incomes to exceed Washington's 31-percent-of-income cap.

Comments

[Tino]

Don't worry -- no one will get indicted for violated Federal laws on financial fraud, so owners should feel free to fabricate any number they like to make it work.

You could probably count the number of arrests of homeowners who lied about their income to get a loan on one hand.

It's bad enough that Grandma is going to lose her $400,00 home for lying about her $30k/year income, but it's not good PR to arrest her and put her in the clink.

[4closureFraud]

Tino,

You have no idea what you are talking about.

Twenty million homeowners did not gather around the kitchen table one night and say "let's take the entire financial industry"

This was a well thought out diabolical plan by the powers that be...

Do the research and see for yourself if you can get passed the brainwashing that you have suffered...

http://4closurefraud.wordpress.com/

http://livinglies.wordpress.com/

4closureFraud

[James Thorner]

I don't believe in grand conspiracies by men in black suits. The real estate boom was a gold rush, aided and abetted by politicians, bankers, Wall Street, etc. But it was a gold rush nonetheless. Typical something-for-nothing mentality, which seems to be an American disease. Patient accumulation of wealth through delayed gratification? Nah!

[Tino]

Sorry, Mr. fraud, your naivete is cute. I wish I could live in your rainbow-and-unicorn world.

"In August 2006, Steven Krystofiak, president of the Mortgage Brokers Association for Responsible Lending, in a statement at a Federal Reserve hearing on mortgage regulation, reported that his organization had compared a sample of 100 stated income mortgage applications to IRS records, and found almost 60% of the sampled loans had overstated their income by more than 50 percent."

http://en.wikipedia.org/wiki/Stated_income_loan

[Mortgage modification help]

Nice post! I think it has helped me a lot in applying for a loan modification. I believe thought that a mortgage loan modification adviser can greatly lower monthly payments to an affordable level. They are just better skilled in working out a better solution for us.

[Fuzzy Bear]

"Florida, however, was much lower, at 12 percent, possibly because of high numbers of investor-owned properties that don't qualify for the program."

It sure looks that way! The majority of foreclosures that I have reviewed have been realtor/investor owned properites and out of state investor owned properties.

[Darius Wells]

Nice post, making home affordable is more to help investor than homeowners. And it still requires investor participation.

[Samuel]

Its always going to require investor participation...

[Mortgage loan modifications]

Making home affordable program is working if you have a loan modification lawyer by your side. The success rate is much higher that way.

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