Troubled Homeowners Can’t Be Bothered with Helping Themselves
In February, the Obama administration announced its $75 billion dollar plan to rescue 4 million homeowners (and I use that term loosely) from probable foreclosure. The concept was that these troubled homeowners would negotiate with their lender for a revised payment plan, test the plan for a few months, then make it permanent for five years. Taxpayer funds would support all of it. So far, this program has been a dismal failure and another waste of our money.
OK, maybe they weren’t technically “lazy.” Rather, they were too clueless to understand what was required of them. Either way, it is it any wonder why these homeowners were “troubled?” It’s not just that they were in trouble with their mortgages. They were “troubled”, period. That means that submitting the paperwork to help themselves out of a mortgage mess was just too much trouble.
Either way, according to the bailout funds “oversight” committee, only 1.26% of homeowners who started a trial payment modification were able to convert it to a permanent one. Here is the hard truth from the article:
“Everyone is going to be shocked at the low conversion rates from trial modifications to permanent modifications,” said Guy Cecela, publisher of Inside Mortgage Finance, a trade publication. The president’s program “won’t result in a significant number of loans being modified and won’t put a significant dent in foreclosure rates.”
And about those silly documents needed from the homeowners:
At JPMorgan Chase, about 92,500 borrowers, or just over half of those in the president’s loan modification program, have made more than three payments. But only 26% of those have also submitted all of the required documents. “We’re not sure why we’re not getting the documents from people,” said Chase Spokesman Tom Kelly, who declined to say how many permanent modifications the bank has completed.
Some of the lenders have started going door-to-door and handing out gift cards just to persuade these stupid homeowners to turn in some basic paperwork so that the taxpayers can help them.
Are you kidding me?
Maybe we should be cutting their grass and taking their trash to the curb as a bonus benefit. “Please, sir. We want to lower your mortgage payment. Will you let us if we do some of your chores?”
Mr. ToughMoneyLove has been saying since forever that a root cause of many foreclosure problems is that we (not me) wrongly encouraged homeownership for people who should be renting. I also predicted that homeowner bailouts were destined to fail but that government mortgage bailout foolishness was unstoppable. (Thanks, Sheila Bair.)
They never listen to me. So we will just sit back and watch the evidence mount.