01-01-09

Program after program is being proposed by the Treasury, FDIC, Bernanke, and virtually every congress person has a different idea of what a homeowners foreclosure prevention program should be or should contain, nonetheless they have all missed the ball by making any possible program voluntary by the bank holding the note to even allow you to consider these options. The possibility of a Obama administration allowing Bankruptcy judges to modify loans is being hailed as a brilliant step in the right direction but even now as they are considering this measure the bank lobbyists are already fighting against it suggesting it would instead increase mortgage rates and hurt Americans further. But we ask how can it hurt America to allow Americans to stay in their homes?

Consider the FHAsecure program, this program was suppose to help hundreds of thousands of people refinance ARMs into normal 30 year fixed loans. Out of the possibility of so many lives and families saved less then 4000 people where even allowed to refinance into this loan before it officially closed Dec 31 2008. This product was suppose to be the answer to the adjustable mortgage problem but equity requirements and credit requirements kept this product out of many peoples hands and instead of fixing this program to perhaps help more people the FHA officially closed it as of Dec 31st.

In addition to FHA giving up on FHAsecure their new program HOPE for Homeowners has been reported by CNN to only have help a few hundred people!  We consider the program to be brilliant and we wish to see it expanded on and further loser guidelines developed since this program would write down your mortgage to 96% of the current home value and refinance you into a 30 fixed. This alone would could reduce mortgage payments by huge margins and truly give homeowners piece of mind. However measure would not have been passed if it forced banks to help people in need, instead the program was made voluntary for the banks to even consider you or the write down. But it was argued that despite this it should be cheaper for the banks then actually paying lawyers and the sheriff to foreclosure on you. This is not the case and most banks refuse to even acknowledge that this program even exists or they tell homeowners that the program is not ready yet. This is shameful on the banks and the governments end, how dare they get everyones hopes up with a program no one can get into.

The HOPE for Homeowners program does hold a lot of potential to help many Americans but not in its current state with the voluntary nature of the program. If the official guidelines of the program where changed to make participation mandatory for the note holder to allow the borrower into the program we would see our current mortgage crisis and thus our economy stabilize. Obama has signaled that he would take a much harder stance to the banking industry once he assumes the presidency and voes it will be one of his first actions. But no one knows exactly what he will suggest or sign into law yet. This is refreshing considering Bush had been pushing for no help to homeowners and only in his last few months in office said he would not veto housing measures but because of his harsh stance in favor of large banks the programs that did pass have no power. Americans are simply disgusted of the stance the current Bush administration has had on the average homeowner and how hesitant they are to help, but instead home are forced to the side lines to watch as they bail out large banks that created this mess in the first place by allowing toxic mortgages or ARMs that adjust to a degree that is designed to fail. We also got to watch as the Auto industry was handed 16 Billion for their bailout! All the American homeowners ask for is a loan program that will refinance them into a affordable loan, they are not even going as far as the Auto industry did by demanding a bailout. Americans simply want to be able to afford their mortgages and to pursue our lives without harassment and fear.

We also shame those mortgage banks that have modified homeowners loans but by not enough to make a different or by demanding that homeowners pay closing costs on a loan they already have. It is reported by the Wall Street Journal that 53% of all modified mortgages revert back to foreclosure within six months. Why would this be? If the loan is only slightly modified which would cause very little change in payment or interest rate the effect is as if the bank has taken no action but only to delay the foreclosure.

So the question on everyones mind is where is the help? Truth of the matter is that we are very unlikely to see any form of help until Obama's administration takes power and it is likely his first act to help people would be to allow bankruptcy judges to force modify homeowner mortgages. This is called a “Cram-Down” and is ferociously hated by banks and their lobbyists, in fact even before Obama is in office they are getting ready to fight is change to the US bankruptcy code. The banks that American homeowners just bailed out side it would cause too much trouble in the mortgage industry and could rise rates and thus make it harder for them to help homeowners – or so their line goes.

While bankruptcy may seem like a harsh action to take the fact of the matter is if you are already late on your mortgage the damage has already been done to your credit. The possibility of this action is huge, not only will it clean up virtually all your debt the mortgage will be modified by the judge and made so that you could actually afford the payment. We would love to see this done and we are very confident that despite the banks resistance that this change to the bankruptcy code will be made and American homeowners will now have at least one viable option to save their family homes.

The fact that banks resist this change reflects how they view loan modifications and the HOPE for Homeowners program since they would take similar losses with those as well but their resistance is far more silent then their resistance to the change in the bankruptcy code since they want the power, they want control over your lives and they want to maximize the profit they can make off of you or your house once they remove you.

If you have further questions about bankruptcy and the possibility of them helping to save your home please click here to get your question answered.

For those of you who have not read our foreclosure guide to available programs please click here.

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