It is great to see the New York Times finally coming on board as they are recognizing that Obama’s “Making Home Affordable” plan has failed and could even be making the market worse!
The fact is, that one needs to have the full cycle of the market and actually feel the full pain of the downs of the market before the market can correct itself. Therefore, the governmental interference is just prolonging the agony.
As a result, many desperate homeowners have sent payments to banks in efforts to keep their homes from going into foreclosure – an act which some see as wasting money. They could have saved in order to move to cheaper rental residences. Some borrowers have seen their credit hurt while they assume that loan modifications involved no negative reports to the credit reporting agencies.
Some experts for the program have impeded economic recovery by delaying a wrenching yet purifying process through which borrowers give up homes and mortgages that they cannot afford and the banks have to cope with their greedy bets on real estate, enabling money to flow more freely through the financial market.
Not allowing the market to fully adjust could prove to be a disaster for the economy by falsely holding up real estate prices, falsely holding families in homes that they could not afford (which was the initial problem to begin with).
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Norman,
This is so true. I have had several homeowners come to me to have a short sale negotiated, and tell me they have been trying to get a loan modification for a year. Then many times it takes 6 months or more to get a short sale approved. There is a lot of emotional pain for the homeowner, and the bank keeps losing more money every month.
Thanks, Kathleen for the comment I have seen numerous short sales work out, but the majority haven’t. Perhaps in different parts of the country we could find that economies have indeed taken a big toll on the home’s values and banks would have little choice but to cooperate. Yet – it’s a waiting game with no certain outcome.
I am currently trying to get a loan modification through Bank of America, it has been 6 months and no word. I have submitted the same documents triple times and nothing. This article is very true and I advise people to not go through a modification with Bank of America. I cannot speak for any other bank, however my neighbors are loosing their house through another bank…