Months ago, the federal government put into place a series of programs, voluntary for the small amount of banks participating in them, that were designed to help homeowners behind in their mortgages work with their lenders to modify the terms of their loans. While never being optimistic about these plans, I conjectured that if the publicity surrounding them helped make more homeowners aware about such alternatives to foreclosure, one of the main problems would have been addressed.
Well, after months of these programs being in place, foreclosure rates have continued to increase. It seems few people are taking advantage of the government's guidance through these programs and use them to lower their monthly payments. Even on a month-to-month basis, foreclosures are increasing, with April 2008 numbers four percent higher than March, according to a up-to-date article by Bloomberg.
Loan Consolidation Programs
For a little bit of perspective on how big the housing emergency is becoming, assess 2007 foreclosure rates to this year. Foreclosure rates have risen 65% from a year ago and are still expanding by the month. California has seen the worst growth at 327% year over year. More than three times as many homeowners are facing the possibility of eviction this year than they were last year, and no relief is in sight yet.
What is not surprising, though, is the failure of the government's extremely touted loan modification programs. The same problems that homeowners have always had in such situations have not even been addressed, let alone solved. Homeowners sit on hold for hours, the lenders take months to make a decision on the workout program, and no voicemail is ever returned. This chain of events naturally continues until the day before the county sheriff sale, when the owners are sadly turned down by the mortgage company.
The same excuse is given to the owners time after time: "We're sorry, but you do not make adequate earnings to qualify for a modification at this time." This ignores the fact that it is the mortgage fellowships themselves who are often responsible for homeowners not being able to qualify for a loan workout. They wait so long that several more cost due dates are missed, which increases interest, adds late fees, penalties, and attorney fees and court costs.
Thus, because the banks wait so long to make a decision on either or not their clients qualify for a mortgage modification, a several hundred or thousand dollar insufficiency turns into tens of thousands of dollars of accrued interest and varied junk fees. And the banks call this a "proactive" attempt to offer homeowners a second chance to get back on top of their mortgages!
Again, the banks and government have been proven to be working together to spew out more propaganda at the people. Rising foreclosure rates and lasting problems with qualifying for a mortgage modification give lie to these voluntary programs that were set up to help homeowners stop foreclosure and work with their lenders through the medium of government aid programs.
What is this results in, though, is a consolidation of assets and financial power in the hands of the banks. Homeowner will lose their homes in large numbers and local governments will face insolvency and allocation crises as asset tax revenues fall. Small and medium size banks will also face collapse due to the mortgage fallout, while large banks gobble up the smaller ones or government takes them over through the Fdic. The motor of the corporatocracy continues to roll over the American people.
Government's Loan Modification Programs A Failure So Far Loan Consolidation Programs
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