Help for Homeowners Falls Short
Image courtesy of webuycincyhomes.net
Originally announced just a month after President Obama took office, the mortgage modification plan was designed to help homeowners who could not afford their monthly mortgage payments. Those who were in trouble of losing their homes were to be helped with a reduction to their mortgage rates. This reduction would take the form of a lower interest rate (as low as 2% for five years) or by extending their loan terms out to as long as 40 years in order to reduce the monthly mortgage payment.
Last summer more than 100,000 borrowers registered for the program every month. This year, the number has dropped to 30,000. It is believed that the drop is a result of homeowners not meeting the requirement for providing documentation of income. While many complained the banks had lost their documents after they had submitted them, the banks are saying that borrowers were not submitting the paperwork that is required.
It is expected that there could be a surge in foreclosures as a result weakening the housing market and affecting the overall economic recovery effort.
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