A mere 5 percent of those who applied for mortgage refinancing under the administration's mortgage-relief plan have received permanent loan modifications.
By Daniela Perdomo, AlterNet
Posted on December 9, 2009, Printed on December 10, 2009
http://www.alternet.org/bloggers/www.alternet.org/144474/
A congressional watchdog panel released a report today that categorically qualifies the Obama administration's mortgage-relief plan as a failure. Only 10,000 homeowners -- or less than 5 percent of all who completed trial programs -- received permanent loan modifications that brought their payments to an affordable rate.
Fewer than five percent.
That dismal success rate translates to only $2.3 million of the $75 billion committed to the mortgage-relief program having been been spent, according to the report. And not only have a totally insignificant number of people been able to refinance their predatory mortgage loans, but foreclosures are on the rise -- and expected to continue rising.
The way the mortgage-relief program works is that homeowners must make three initial reduced payments under a trial period. After successfully making those payment on time, borrowers must provide proof of income and a financial hardship affidavit.
Jamie Dimon, CEO of JPMorgan, has the audacity to assert that homeowners are to blame for the low rate of mortgage renegotiations beause they "will not file the documents. We need the documents. We are trying to simplify it."
Somehow I'm not buying that imperiled homeowners are not willing nor able to provide ample evidence of their financial ruin -- especially when doing otherwise could land their families on the street. Instead, I'm willing to bet that the "financial incentives" the government is offering mortgage companies to reduce loan payments are simply not high enough for the bailed-out banks to be moved to act beyond their token participation thus far.
But this isn't just the banks' fault -- making a profit is their reason for being, after all, and they don't beat around the bush about it.
Instead, I blame the administration. I fault them for making banks' participation in the program voluntary. Why are we really surprised mortgage lenders don't want to make less money off of regular Americans who don't have the right insider strings to pull for a bailout of their own?
Wall Street, 1. Main Street, 0. Again.
Daniela Perdomo is a contributing writer & editor at AlterNet. You can follow her on Twitter @danielaperdomo.
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