There's an interesting article at CNN about the abysmal failure of the HOPE for Homeowners, foreclosure prevention plan passed last summer.
The article said:
In the five months since it has been in effect, HOPE has helped exactly one homeowner to avoid foreclosure.
It only helped one homeowner avoid foreclosure? You've got to be kidding me. When I read this I thought that I was misreading it or that it was a misprint; but after reading it 4 or 5 times I realized that the HOPE for Homeowners foreclosure -prevention plan was truly a colossal failure. But didn't we say that "voluntary" participation of lenders was simply NEVER going to happen on the scale necessary to prevent this foreclosure crisis?
The article continues:
This despite Congress having made $300 billion available to back these loans and estimating that the program would benefit as many as 400,000 families. "As it stands now, we've only gotten 752 applications," said Federal Housing Authority spokesman Brian Sullivan. "And only insured one loan. Needless to say, the program isn't working terribly well." Rep. Michael Castle (R - Del.), who sits on the House Financial Services Committee, agreed, calling HOPE "one of the most failed programs we've had in a long time."
This is why we need to the power of bankruptcy to modify these toxic mortgages. Mortgage companies are not going to voluntarily help homeowners facing foreclosure if it means less profit for them. It's simply not in the nature of their business. Right now lawmakers are attempting to "sweeten" the pot to convince more mortgage companies to participate in the program.
But as of this writing most of the big mortgage companies have outright REFUSED to participate in the program despite government guarantees of the loans. With the power of bankruptcy courts to modify mortgages homeowners facing foreclosure would have the leverage they need to bring mortgage companies to the negotiating table with affordable modifications. We need the mortgage modification changes to bankruptcy passed into law NOW.