The Making Home Affordable foreclosure prevention plan was suppose to help millions of homeowners avoid foreclosure , however the foreclosure program has failed to attain it goals. According to a Treasury Department report, 27 percent of homeowners taking part in mortgage modification trails are delinquent on their mortgage payments.
And while the foreclosure prevention plan was designed to help millions of homeowners facing foreclosure, only about 650,000 borrowers are currently participating in the trail phase of the loan modification program. A pithy 1,711 homeowners battling to avoid foreclosure have converted their loan modifications to a permanent status, which is a reflection of the mortgage industry's reluctance to permanently modify mortgages.
The response of legislators and the Treasury Department has been inadequate. Just a few weeks ago, mortgage lenders were threatened with losing access to incentive money if they don't increase the number of mortgages permanently modified. However, the mortgage industry has already received what it was after. While millions of homeowners faced foreclosure, failing banks received billions in bailout money that had little to no real strings attached.
Those same lenders have done very little to help homeowners and by extension communities avoid foreclosure and its negative impact. While the Treasury Department has recently agreed to extending the trail phase of the modification program from 3 months to 5 months, that is only a band aid and not a long-term solution to the foreclosure crisis.
If we want to help homeowners avoid foreclosure in the long-term, our legislators will need to force banks to modify mortgages in a way that are affordable over the long-term and give the bankruptcy courts the power to modify toxic mortgages during Chapter 7 and Chapter 13 bankruptcy .