The federal government has provided $75 billion for a program that is supposed to keep many Americans from losing their homes to foreclosure. But the evidence suggests that the money has not helped much.
Almost half of the 1.3 million people who enrolled in the Obama administration’s plan to rescue their mortgages have instead dropped out. That means there will be no mortgage relief for those 630,000 homeowners.
Only about 422,000 people – roughly a third of those who joined the program – have managed to get permanent loan modifications to help them make their mortgage payments.
Unfortunately, approximately 1 million homes are expected to be lost to foreclosure by the end of this year alone. That is up from 900,000 homes lost in 2009.
In a normal year, about 100,000 homes are repossessed. But the foreclosures in just one recent month nearly equaled the total number of foreclosures in an entire “normal” year.
These grim figures illustrate clearly why the federal government should not have exerted pressure on banks to make home loans to people with poor credit. Many people were allowed to borrow too much money – at adjustable rates that soon “adjusted” upward and put their mortgage payments out of reach.
Many of the people whom government thought it was “helping” now are in deep trouble, losing their homes and their investment of money and time they put into those homes.
That is the sad result of government trying to rig the market to achieve shaky social aims.
You may be fortunate enough to be able to make your own house payments, so you may think all of those foreclosures don’t really affect you. But the value of your home may have dropped – a lot – because of the glut of foreclosed homes now on the market.
Bad policies affect us all.