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2010-11-25 12:18:14

Federal Aid Unable to Control Rise in Bank and HUD Foreclosure Listings


The number of homes under bank and HUD foreclosure listings continues to rise in most areas of the U.S., giving weight to some housing market analysts’ claim that the foreclosure mitigation programs of the federal government have proven to be ineffective.

According to market analysts, there are more homeowners leaving the programs than there are people entering them. A report by the Treasury Department has revealed that, as of October 2010, there 520,000 homeowners enrolled in the Home Affordable Modification Program (HAMP) of the government.

This represents an increase of 23,750 from September 2010 which translates to a less-than 5% increase. Meanwhile, 36,300 homeowners have decided to drop out of the program in October 2010 for the reason that they were unable to meet their monthly mortgage obligations. The drop-outs represent a 24% increase when compared with September 2010.

According to a number of legislators, HAMP has failed to meet its goal of lowering the number of properties under bank and HUD foreclosure listings. The program was established to pay banks and lenders to modify or reduce the monthly loan payments of troubled homeowners. Part of the problem, legislators have stated, is the depressed value of properties and the high unemployment rate of the country.

During its initial launch, HAMP was projected to help around three million borrowers with a budget of $50 billion. It was designed to provide loan servicers with a $1,000 payment to rewrite the terms of mortgage loans and to also pay servicers a yearly amount of $1,000 for as long as three years and for as long as homeowners are under the program.

An analysis of HAMP-related data showed that the 520,000 households aided by the program since its inception in 2009 are hardly reflected in the foreclosure numbers of the country. Government officials have admitted that the initiative is finding it difficult to slow the continuous increase in the number of foreclosures with unemployment at record levels and the ongoing recession still having its effects.

Some officials have stated that more should be done to help troubled homeowners, particularly those who are unemployed. They admitted that the problem of bank and HUD foreclosure listings cannot be stopped, but there are still things that can be done to expand the coverage of aid programs.



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