Time to get serious about foreclosure prevention

Sheila Bair, head of the FDIC, the organization that insures deposits and takes over failed banks, is unhappy with her administration’s response to the foreclosure problem:
“I’ve heard the stories of people who are suffering and can stay in their homes if there is just a small adjustment to their loans,” said Mrs. Bair, a Republican who was appointed to her post by President Bush two years ago. “There are some people in the Republican Party who resent the idea of helping others,” she added. “But the market is broken right now, and unless we intervene, these people and the economy won’t be helped.”

Unfortunately, even what Mrs. Bair has done so far has been of very limited use.  When she took over IndyMac bank last summer she unveiled a program to help the 65,000 borrowers who are more than two months delinquent on their mortgages at IndyMac.  But so far, that program has benefited only 7,200 people.

A representative of IndyMac said that many of the overdue loans turned out to be ineligible for the program, and that some borrowers had not yet responded to the bank’s modification offers.

Other efforts have also stumbled. A $300 billion foreclosure prevention program passed by Congress this summer to help up to 400,000 homeowners wound up larded with requirements, like requiring background checks and restricting eligibility for mortgage relief to people at risk of foreclosure as of March 1st.

As a result, fewer than 200 people have applied for the program since it opened in October 2008, according to officials from the Department of Housing and Urban Development, and no loans have been modified.

In the meantime, pressure is mounting on homeowners in need of relief.  As I have said many times, send these problems to bankruptcy court!!!

Read more about how to Avoid Foreclosure and Help with Mortgage Modifications at AskJackAboutDebt.

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