Loan Modifications Are Not Working And The Government Doesn’t Get It

this is really the same song and dance how many times have you heard even when Bush was still in that we are going to do everything and encourage the banks to help out homeowners.....uh ya right

It is going to get ugly as unemployment not only grows but salaries and hourly wages come down. That will lead to more defaults, more foreclosures and . . . more government bail outs.  Keep those presses running.

How soon will this be used as an excuse for the administration to dictate all of the terms of the banks lending practices? If they can run the banks, they'll have even more control over everyone's lives.

John,  I do not know anyone who has been successful getting their loan modified even with professional legal assistance.

John, If the government is going to point out the bad guys, I wonder if it will stand in front of a mirror too.  As always, the govt is the problem, not the solution.

I agree with Bob, the Government was and is the problem. I guess the next step is going to be the take over of the banking industry. I'm sure that's going to work out just ducky.

John - never fear, the president is having a jobs summit this week, and, the word is he will reinstitute a Carter era jobs program, you know, more government jobs, the kind that don't generate growth. Also, I do believe that the administration wants to start fining lenders that don't modify enough loans.

John, I'm confused about this whole thing. On the one hand, I've read over and over that the federal program to encourage loan modifications is not geared to today's realities because it was aimed at sub-prime loans in default. On the other hand, I recall media reports stating that a centerpiece of the program involved loans bought by Fannie Mae and Freddie Mac, the majority of which would be, by definition, prime loans. It's not clear at all that folks who got sub-prime loans for whatever reason have much of a prayer in achieving a workable modification. (Or most other people either, which is your point.)

Homes seem to be going to sheriff's sale at a much faster rate than those receiving a loan modification. In theory, this should reflect banks' calculations that foreclosure is the less costly option in these cases. But I wonder.

I note one other ugly detail. Suppose someone who still has equity in his home loses his job, can't afford the payments and is headed toward foreclosure. I bet the lender--as a business decision--would be more likely to pursue foreclosure vs modification because the borrower's equity provides a cushion for the bank. Lovely.

-- Peter Gibaud