Home > Foreclosure alternatives > CNN: Obama Administration Sings New Tune on Foreclosures

CNN: Obama Administration Sings New Tune on Foreclosures

 

The Obama administration appears to be backing away from their plan to modify the nation's mortgages.

 

 

Placing blame in part on the lack of success with the Home Affordable Modification Program, CNNMoney.com reports that the Obama administration seems to be changing its stance on the need for foreclosures to continue.

Last week Phyllis Caldwell, head of the Treasury Department’s Homeownership Preservation Office, told a congressional panel that “an important part of ensuring longer-term stability in the market is to enable properties to be resold to families who can afford to purchase them,” according to the CNNMoney.com report.

And White House Press Secretary Robert Gibbs last month told reporters that without sales of homes in distressed areas the “recovery in the housing market stops. It’s frozen.”

“That obviously can have — we believe and others believe — a very negative and detrimental impact to our economic recovery efforts and the housing markets in states that have been hardest hit,” Gibbs said.

From what I have seen here in Bergen County and surrounding areas, a few loan modifications work out, but the majority end up failing for one reason or another. One common thread I hear from home owners who have attempted a loan mod is that they new payment isn’t much lower than they were paying before.

In part, I think the problem is that some people wait until they are several months behind on their mortgage before attempting a modification. Then, with the penalties and unpaid interest added onto the principle, even with a lowered interest rate, the monthly payment remains too high.

Fortunately, most mortgage lenders have realized that by approving a short sale at market value they can cut their losses tremendously. So the good news is that there is a way to avoid foreclosure, although it will generally mean that you have to leave your home.

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