Foreclosures

If hundreds of thousands of homes are in foreclosure and maybe two million families will lose their homes this year, the government must be doing something right. I mean must be doing something – right?

Well it turns out, they are doing something, something being spelled H-A-M-P, which stands for Home Affordable Modification Program. The program is designed to reduce the mortgage payment of homeowners unable to make their present payment due to a significant reduction in income. It seems that losing one’s job can result in a significant reduction in income. Who knew?

The program may be working. In fact, I personally know of someone who received a HAMP modification, and it’s rumored there might be another one. Actually, there have been several thousand more. Unfortunately, however, about two thirds of those who have entered the program have since dropped out. I suspect it’s that nasty lack of work thing.

I’m a little surprised that it took government intervention to mandate a program to help homeowners in trouble. It would seem logical that the lenders, usually banks, would have tried to help the situation on their own, given the likelihood of several million loans going bad and several million unhappy borrowers. Several million potential bank credit card users, I might add. Speaking of credit cards – but don’t get me started; that’s a story for another time.

Wouldn’t it seem that the financial ramifications of all these “underperforming loans” would suggest that the lenders try some creative solutions other than foreclosure? What about the inevitable PR disaster? Then again, if my early Sunday School training doesn’t fail me, the money lenders have had a PR problem for some time. I guess 2000 years haven’t been sufficient time to improve the situation.

In any case, we have a situation with millions of people losing their homes, the government trying to help, with limited success, and the banks trying, incredibly, to speed up the foreclosure process, so more homes can be sold at a loss or sit and deteriorate, even sooner.