bobbyw24
04-20-2010, 10:48 AM
The Obama administration should consider forcing lenders to make principal reductions for struggling homeowners who owe more than their home is worth, the watchdog overseeing the $700 billion bank bailout said in a report released on Tuesday.
Late last month, the White House announced a significant expansion to its efforts to help homeowners by providing subsidies for lenders who write down principal for so-called "underwater" borrowers.
Those programs are voluntary.
"Treasury should consider changes to better maximize its effectiveness," said Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP.
Barofsky said the voluntary nature of the Home Affordable Modification Program (HAMP) principal reduction plan sets up situations where some borrowers benefit, while others who may be just as deserving, do not.
"Giving (mortgage) servicers the discretion to implement principal reduction introduces a questionable inconsistency into the HAMP program and stands in stark contrast to the mandatory nature of the other significant mortgage modification triggers," Barofsky wrote.
The report also urged the administration to consider extending the amount of time unemployed homeowners are forgiven from making mortgage payments as the maximum six months now allowed may not be long enough.
"Although no program will assist all unemployed borrowers, Treasury should strive for a program that will at least assist the typical unemployed borrower," the report said, noting the average duration of reported unemployment is more than 31 weeks in the latest recession, the longest stretch since records began in 1948.
Rising Tide of Foreclosures . . .
http://www.cnbc.com//id/36658764
Late last month, the White House announced a significant expansion to its efforts to help homeowners by providing subsidies for lenders who write down principal for so-called "underwater" borrowers.
Those programs are voluntary.
"Treasury should consider changes to better maximize its effectiveness," said Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP.
Barofsky said the voluntary nature of the Home Affordable Modification Program (HAMP) principal reduction plan sets up situations where some borrowers benefit, while others who may be just as deserving, do not.
"Giving (mortgage) servicers the discretion to implement principal reduction introduces a questionable inconsistency into the HAMP program and stands in stark contrast to the mandatory nature of the other significant mortgage modification triggers," Barofsky wrote.
The report also urged the administration to consider extending the amount of time unemployed homeowners are forgiven from making mortgage payments as the maximum six months now allowed may not be long enough.
"Although no program will assist all unemployed borrowers, Treasury should strive for a program that will at least assist the typical unemployed borrower," the report said, noting the average duration of reported unemployment is more than 31 weeks in the latest recession, the longest stretch since records began in 1948.
Rising Tide of Foreclosures . . .
http://www.cnbc.com//id/36658764