Monday, May 17, 2010
More than 100,000 Americans who entered into a home mortgage modification program created by the Obama administration have found themselves kicked out of the relief effort, making their lives worse than if they had never bothered to get involved in the first place.
Under the program, homeowners agreed to make timely payments at a reduced rate until the trial period ended, after which the modified payments became permanent. But for those who don’t make the cut at the conclusion of the trial period, banks suddenly demand payment of the amount that was discounted, often in a lump sum. Participants rejected from the program also have taken hits to their credit ratings because the trial payments can be reported as delinquent.
The number of those in this terrible situation is expected to rise. Of the 800,000 Americans who were granted trial modifications, anywhere from one-third to one-half are expected to be rejected, according to the Department of the Treasury.
-Noel Brinkerhoff
Gov’t Loan Mod Program Leaves Some Homeowners Worse Off (by Ryan Knutson, ProPublica)
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