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Wednesday, December 17, 2008

HUD: Mortgage Modification Program "a failure"

by Calculated Risk on 12/17/2008 01:50:00 PM

From the WaPo: HUD Chief Calls Aid on Mortgages A Failure

Secretary of Housing and Urban Development Steve Preston said the centerpiece of the federal government's effort to help struggling homeowners has been a failure and he's blaming Congress.
The three-year program was supposed to help 400,000 borrowers avoid foreclosure. But it has attracted only 312 applications since its October launch because it is too expensive and onerous for lenders and borrowers alike, Preston said in an interview.
One of several federal and state foreclosure prevention initiatives facing difficulties, HUD's Hope for Homeowners program has been especially hamstrung. For instance, a program launched by the Federal Deposit Insurance Corp. on behalf of IndyMac Bank customers has modified more than 3,500 mortgages in two months of operation.
I don't if Congress is to blame, or if the program was implemented poorly, but it is funny that they hold up the IndyMac program (with just 3,500 mods) as being more successful.

Here was Tanta on IndyMac in October: IndyMac-FDIC Mortgage Modification Plan: Still in the Real World
I wrote a snotty post at the end of August after Sheila Bair's plan for "affordability modifications" of the former IndyMac loans was announced, the burden of snot wisdom of which was my prediction that Bair was going to discover that it's a lot harder than she thinks to get successful mortgage modifications done on a wide scale in a very short period of time. However, I did express the hope that the Bair plan would prove remarkably successful and indicated my willingness to eat my words should it prove necessary.

Looks like I'll have to stick to my usual dry toast and bananas after all.
Read it all! I think more people are discovering that successful mortgage mods are hard to do.