When the Obama administration unveiled its sizeable mortgage relief program, many homeowners celebrated. It looked like they were finally going to get a leg up out of the financial problems that have hindered so many for so long. Unfortunately, that hasn’t been the case. Find out why mortgage relief isn’t turning out to be as helpful as many thought it would be – and what you can do about it.
The much-touted mortgage relief plan
Last February the Obama administration unveiled a mortgage relief plan set to help millions of Americans. The strategy was to use $75 billion in funds to thwart the staggering foreclosure rate. In turn, stemming the foreclosure rate would help cut down on the effects of the recession.
The plan was meant to keep between seven and nine million people from facing foreclosure. It included several incentives directed toward mortgage lenders. Many of these incentives offered lenders the ability to cut mortgage payments to levels families could afford. Specifically, this meant charging no more than 31% of a homeowner’s income.
Another aspect of the plan included a way to help those who were upside down on their mortgage loans by offering refinancing options.
Key in the guidelines of the plan was that homeowners needn’t be delinquent on their payments in order to qualify for help. The thinking was, help people before they desperately need a lifeline.
Plan specifics include allowing homeowners to reduce their interest rates to as low as 2% for five years. For borrowers that qualify for the plan, a trial period of five months must be met for full approval.
Not going according to plan
Unfortunately, now that the mortgage relief plan has had nine months to get rolling, it’s not seeing the progress many expected by now.
In fact, lending giants like Bank of America and JPMorgan Chase have stated they’ve only completed roughly a quarter of the applications for revamped mortgage packages.
Does it really come down to paperwork?
One of the biggest complaints the major lenders have regarding the plan is that homeowners are not completing the necessary paperwork.
Homeowners, on the other hand, are having a hard time rifling through the many pages of necessary paperwork.
Add to that the fact that homeowners aren’t sure of who to contact or where, while lender employees are having a hard time rounding up the necessary information they need to complete the mortgage relief process.
Obama’s side seeking action
Understandably, the Obama administration is disappointed with the lack of progress. It’s said that the coming weeks will see them cracking down on mortgage companies and pressuring them to fulfill their obligations.
Along with that, the Treasury Department now plans to closely monitor the eight largest lenders. It will also require them to submit twice-daily reports, detailing their progress. Finally, the Treasury plans to publish a list of the mortgage companies woefully behind on these obligations.
Balancing the American Dream
Home ownership has long been one of the hallmarks of the American Dream. That dream is threatened every time a new family faces foreclosure. Don’t become part of this crisis – look your situation in the eye and figure out what resources you need to refinance and get back on your feet. Don’t rest until you get there, whether it means you have to be dogged about getting answers or tenacious in the face of paperwork keepers. Stick with it and you’ll get what you deserve.
