Exactly why do the government mortgage modification program?

The stimulus plan was a little overdone following the 2008 presidential election by President Obama. A mortgage loan refinancing plan through the Federal Housing Administration was one of the first programs called Make Home Affordable. Benefits are rearranged on the loan for everybody between the Federal Housing Administration and loan applicant’s lender. This was a huge money advance the Treasury used for the program. Some think the money went to waste. Article source – Is the federal mortgage modification program worth it by Personal Money Store.

Uncle Sam and the way loan refinancing works

The way the Make Home Affordable program works is that a person who wants to modify the financial institution loans on their home has to apply for the modification. If the application is accepted, the government, working in coordination with the applicant’s lender, sets up a trial program for a few months. The payments and the loan are restructured on a trial basis, to see if the person can still meet their payment obligations. If the temporary modification is successful, then a permanent refinancing is made. It sounds easy. Many wonder if the program should become permanent or of the modifications aren’t working.

Program passes less than half

Less than 50 percent, says the Wall Street Journal , of the modifications work. Only 434,716 modifications have gone through so far. This is according to an audit in August done for the Home Affordable Refinancing Plan, or HAMP. There were a lot that got trial modifications canceled. This was about 616,839 trials. That is lots of fast cash down the drain. Also, the individuals who apply are already at incredible risk. Debt to income ratios for HAMP participants tends to be at a 63.5 percent average. A person has to have a debt to income ratio of 41 percent or lower to get an FHA mortgage, usually the biggest source of bad credit loans for homes.

Stimulus going

The plan had one goal. This goal was to stop foreclosure. Modification should be left to the private market considering 40 percent of applicants can’t do anything.

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Wall Street Journal

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of applicants result in being able to do nothing and have no change. Maybe this means the private market should the take the plan as it is cut}.

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Wall Street Journal

online.wsj.com/article/SB10001424052748704075604575356663725805580.html