Foreclosure assistance program not enough to save American homes

Foreclosure assistance program not enough to save American homes

The foreclosure assistance program with a $1 billion budget launched last year by the Obama administration was supposed to help unemployed Americans stay afloat while finding new jobs.

"It will give millions of families resigned to financial ruin a chance to rebuild," Obama said at the time of the program's launch. "By bringing down the foreclosure rate, it will help up housing prices for everyone."

Instead, the Home Assistance Modification Program has failed to live up to its promise. Loan applications of hundreds of thousands of homeowners have been denied. Obama's foreclosure assistance program has failed to prevent a surge in foreclosures and home prices are still dipping for the six straight month, a report released on Tuesday revealed.

Republicans in the House of Representatives have just about had enough of it, and voted on Tuesday to terminate the foreclosure assistance program.

But with 225,000 foreclosure filings in February recorded by RealtyTrac, killing the aid program may not be as feasible as one may think. As estimated 145,000 Americans are currently under trial modifications.

The Treasury Department claims that the program has kept more than 500,000 Americans from losing their homes and have also influenced lenders to offer in-house modifications.

But the system has been flawed from the start, critics say. Government-backed mortgage giants Freddie Mac and Fannie Mae were tapped to implement the program. This was a mistake seen by the Congressional Oversight Panel, which said that the two firms "are highly conflicted because they hold the credit risk on most mortgages in the United States and have their own operational concerns."

With the current system still in place, U.S. homeowners have no choice but to keep trying to avail of the foreclosure assistance program.

Posted by James Fried on Wednesday March 30 2011, 10:03 AM EST. Ref: NYT. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0