With record (and rising) number of foreclosures in Minnesota and across the nation, the Obama administration wants mortgage providers to work harder at keeping people in their homes. Prime complaint – mortgage holders aren’t using the federal programs put in place to help homeowners. NPR reports on the $75 billion Making Homes Affordable program:
The borrowers pay reduced payments for a trial period, and after that the servicers are supposed to make new payments permanent. But very few of the modifications have actually been made permanent. So the new plans being announced today are supposed to push lenders to make that happen.
The more we can get lenders and borrowers talking to each other with a third party involved, like either foreclosure prevention counselors or volunteer lawyers or something, the more we are going to keep houses out of foreclosure. …
Right now, in some of these areas, the primary buyers of houses are the city, nonprofits or slumlords or speculators and we don’t have a whole lot of your typical homebuyers or good landlords buying up properties.
AP says the administration is expected to announce today that it will withhold payments to mortage companies until the modifications are made permanent, and will name the mortgage companies that are “lagging.” The theory apparently is that publicity will shame companies into doing the right thing. Good luck with that.