Treasury program is failing to stem the tide of foreclosures

Posted Sep 10th 2009 1:10PM by Connie Madon
Filed under: Housing, Recession

The U.S. Treasury Department says that 6 million Americans face foreclosure in the next three years.

This number is shocking. What is being done to stem this bloodletting? The Treasury has a program to rework existing mortgages for people who qualify. So far only 360,165 people have had their mortgages reduced through August, up from 235,247 in July.

The Treasury's program is called the Home Affordable Modification Program (HAMP). The program pays cash to servicers to reduce mortgage payments to 31% of a borrowers income.

Here are the numbers:

Just 9% of eligible homeowners had their payments reduced as of August 12.
However the Treasury said that they were on track to reduce to achieve 500,000 modifications by November 1.
The Treasury said that 47 servicers have signed up for HAMP.
Less than 21% of the 47 servers had modified less than 5% of troubled loans.
Some servicers did not modify a single loan.
Saxon Mortgage Services, which modified 39% of eligible loans, was the highest on the list.
Bank of America (NYSE BAC) was the lowest with only 7% of eligible loans modified.

As we know, a strong housing market is key to our recovery. These numbers tell us that we are not turning the tide. With 6 million more foreclosures in the next three years, the market will hover in the doldrums unless a more aggressive stance is taken.

Do you believe that the housing market will turn around this year?

Tags: BAC, Bank of America, foreclosures, HAMP, Home Affordable Modification Program, housing, inthenews, mortgage modification, Saxon Mortgage

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Reader Comments (Page 1 of 1)

9-10-2009 @ 2:34PM

Marty said...

These are the same people who are going to come up with a comprehensive health care program...Anyone who believes they can do it are on drugs.

9-10-2009 @ 5:04PM

James said...

Firstly we need define "turn around" in the housing market. Its unfortunate that these terms are used so freely these days referring to a time when turn around meant positive growth and appreciation. The fact that there are people looking at this as Black and White is quite pathetic actually. Is it not obvious there will be a lot of grey before any type picture emerges.

The real question is, what will the landscape look like in the consumers mind after things get ironed out. I have a feeling that there are investors just truly believe consumers are waiting to pull the trigger as if having to buy 'wants' is a necessity. Unfortunately fact defies marketing and when marketing fails, the options are limited on what products can be sold.

Just keep in mind that banks never used to be as big as they are now and that houses were never intended to be construed as investment tools. So until the landscape is more clearly defined, you are better off going to casino.