Foreclosures hurt everyone involved including the home owner, the lender, and the surrounding home market as well. A plan instituted by the Treasure Department in an attempt to cut down the amount of foreclosures has come under fire due to skeptics stating that the program does not tackle the true problem at hand.
The program's report was released on October 8th and initially the results were good and the number of modifications to loans increased to over 500,000 by October 6th, up from 487,081 at the end of September. These numbers made it appear that the program was working for its intended purpose. Since the numbers are cumulative they can be quite deceiving. The true numbers of new homeowners was at a low though. Only 100,216 new home owners were signed in September which was higher in August at 133,192. This is a drop from the July number of 110,397 as well which makes someone wonder if the program is really working.
At roughly the midpoint of the program when the report was released almost half of the eligible participants were included in the program. Signups also began slowing down at the time of the report which didn't show much hope for the future progress.
Although the program makes an effort many critics worried that it is not nearly good enough to combat the huge crisis the housing market is facing. The numbers are so high that even 2 to 2.6 million foreclosures being stopped will not even put a dent in the amount that could occur with estimates stating that close to 12 million foreclosures could happen in the current economic time period. Program estimates state that it was meant to help 3-4 million of the home owners who faced foreclosure at the time but these expectations have been stated that they are incredibly unrealistic.
The way that the program is designed has many spectators wondering if instead of stopping foreclosures it is merely delaying them. The crisis has hit for people who have subprime mortgages and although the program promises permanent fixes, they are not exactly true to the name. Permanent modifications to loan terms only last 5 years so many are wondering whether the same problem will happen down the road after the rate adjustment has expired. The results were also compiled while many of the participants in the program had not yet gone past the trial period, which evaluates individuals to ensure they use the program for its true intention.
The program doesn't appear only negative though. Financially the program appears to be beneficial to the tax payers and investors involved in the business. The home owner's benefit of course but these extend far beyond just the initial thought. Interest rates falling down have improved situations for many home owners because they are able to get refinanced mortgages. The refinances allow individuals to get new mortgages which rival their current ones and can significantly cut down the price of the monthly payment the home owner is subjected to.
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