At one point does this stop being story?
WSJ: An Obama administration effort to reduce home foreclosures by lowering the mortgage payments of struggling borrowers before they fall behind is failing to help as many people as expected.
Among the problems: Some homeowners are being told they must be behind on their payments to receive help, which runs counter to the aim of the program. In other cases, delays are so long that borrowers who are current on their payments when they ask for a loan modification are delinquent by the time they receive one. There is also confusion about who qualifies.
To help get the modifications in high gear, officials from 25 mortgage-servicing companies will meet with the administration to discuss what’s holding back the program.
Will this chit-chat help? Maybe.
What needs to happen is the mortgage-servicers need to level with the administration about why their operations are so dysfunctional. If it’s just a matter of the difficulty in ramping-up and building the mortgage-mod infrastructure then that’s fine, and the program should be given more time before we render a judgment.
But, if it really comes down to economic incentive, namely that the holders of mortgages don’t want to modify for fear that if they do they’ll modify themselves straight into insolvency then that needs to get out so we stop with the charade, and all the confusion and extra cost that falls upon desperate homeowners.
Officially all the banks support the administration’s plan and that’s great. But if secretely they have to drag their feet, then let’s kill it now and think of something else.
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