In the Making Home Affordable program working? | Business

Treasury Secretary Tim Geithner announced today that the government’s Making Home Affordable mortgage modification program has lowered monthly payments for 500,000 homeowners, beating a Nov. 1 deadline the administration set earlier in the year. I wish Barbara were here to tell us what this means (she’s off this week). The overall goal is 4 million loan modifications, so there’s still a ways to go. It’s also impossible to tell up-front how many of the modifications will stick—that is, prevent foreclosures rather than merely delay them. The Washington Post quotes an economist estimating that the mods have reduced foreclosures by 7% to 8% so far this year. The idea is that if you slow foreclosures, you slow home price declines, which in itself reduces the number of foreclosures. Still, as far as stopping the house price collapse, I think the super-low mortgage rates engineered by the Federal Reserve and made possible by the bailout of Fannie Mae and Freddie Mac have played a much bigger role than the loan-modification program.

Stocks Rally Further in Run-up to EU Summit

MOSCOW — Global stocks enjoyed one of their best days in weeks on Tuesday ahead of a summit of European leaders that’s expected to be dominated by calls to boost economic growth.

Europe remains the focus of attention across all financial markets in the run-up to the June 17 Greek election that could go a long way to determining the country’s membership of the euro as well as the future of the single currency zone.

http://www.rodgermitchell.com Rodger Malcolm Mitchell

At the current rate, some people will wait 5 years or more to have their loans modified. Meanwhile, they are required to keep their mortgage payments up to date, while simultaneously proving they can’t afford to make their payments.

Only the government could design a program like that.

Rodger Malcolm Mitchell
plukasiak

What Barbara would say…

She’d point out the key paragraphs…

Administration officials shed no light on what experts say is a crucial determinant of the ultimate success of the program: They said they did not know how many of the mortgage modifications had actually lowered the loan principal, as opposed to merely stretching out the life of the loan through lower payments.

Experts say homeowners whose principal balances are reduced are much less likely to fall back into delinquency. Reducing the principal is particularly important for those who are underwater, meaning they owe more than their home is worth.

And while the recent MERS case in Florida may not have had enough time to work its way through the system, Barbara might have mentioned that as well.