Free money is the hardest money to get.
Right now there are lots of money programs with various names. Unemployment is one, the first time homebuyer tax credit. These worked quite well. Then there are others, HAMP, HAFA, etc. just not able to make a significant difference for everyone.
Maybe "incentive" is a better name for these programs, we'll call them incentives instead.
Either way, these incentives may be eliminated soon. The House Financial Services Committee is voting this week on four bills that would eliminate the HAMP program and three other programs in place to prevent foreclosure. They have described these programs as failed and ineffective.
Why is this?
I believe there are a few reasons:
The first reason is that people are overwhelmed. They hear catch phrases like "loan modification" and once they've heard it enough they trust it. These other new names have acronyms like HAFA and HAMP and no one is clear what they mean. People these days feel like there are a lot of choices and they aren't sure what to do with them.
I received a call from a lady yesterday on the phone. We spoke for quite some time. She has been waiting a year for a loan modification. If she doesn't get approved for the modification then she will let her San Diego real estate go into foreclosure. I talked with her about the Keep Your Home California Plan, she thought it was too much to ask to talk to a counselor. As far as doing a short sale, she felt like there were too many options.
I sent her this video to watch, it's the best explanation I see of why loan modifications never happen. http://www.youtube.com/watch?v=ssl5yb7FewA
Well, the criteria really are stringent. I represented the buyer and the seller on a transaction recently. The seller was turned down for HAFA because the criteria were just too strict, the answer we got back was out of whack. It was as if we had asked a question about real estate and they responded with an answer about pizza. Sometimes you are dealing with apples and oranges.
Although these programs don't work for everyone, they do work for some people and maybe they can be improved instead of eliminated. The 4 bills that would be terminated are the HAMP, FHA RefinanceProgram, the Neighborhood Stabilization Program, and the Emergency Mortgage Relief Program.
So now we find ourselves with these programs potentially up in smoke. What do you think, are we better off without these or not?
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