Why The “Making Home Affordable” Plan Does Not Work

This is my first blog and I plan on writing this to help inform the American people on what is happening with Loan Modification programs.  I’m an attorney that works with homeowners to stop foreclosure and help them keep their homes.  When the “Making Home Affordable” plan was launched by President Obama in March 2009, it was envisioned as a way to help a lot of the struggling homeowners in this country.  Unfortunately, it has fallen far short.  I have clients that put in their application under this program in March and April, that have still not received any help.  They just get further and further behind in their payments without any relief. The government keeps publishing data about how many homeowners they are helping but I would like to see the actual numbers published.  How many applications have been opened?  How long does the process take?  How many applications have been rejected?  How many have actually been modified?  These are some big questions.  Here are my 5 reasons it does not and will not work:
1.    No Hammer.  The program was supposed to be mandatory on all Banks that received the TARP Funds.  But how is that enforced?  Who monitors this?  With no enforcement language and no repercussions, Banks were allowed to pick and choose who they wanted to help and how long it would take.
2.    Gordon Gekko.  Let’s say you sell sneakers.  I buy a pair of sneakers from you for $40.00.  One year later I come back to you and ask you to give me back $20 of the $40 I spent.  I think anyone reading this would agree that the answer would be NO.  Why then would a Bank/Lender agree to cut their interest rate in half or give back principle on a loan that they made a couple of years ago.  Greed is good still in the Corporate World
3.    Free Service.  You get what you pay for is still true.  Originally, this program was advertised as a “do it yourself” program, or go to one of our free counselors that will help you fill out your forms.  As most homeowners have found this is not an easy thing to do.  Those that tried to do it themselves either got the run around or were so frustrated with the process they gave up.  Those that called the “government” backed organizations found that they knew more about the program than the people they had to trust to help them through this. 
4.    Stall, Stall, Stall.  The Banks/Lenders became experts in this very quickly.  The most often heard statement we hear is “we never received the information”.  Almost none of the lenders will let you email anything to them.  It all has to be faxed.  Then you wait 5 days before the fax will show up on their computer files.  Then wait 30-60 days for a response. Then re-submit all of your documents because they are now 2 months old.  Wait 5 more days.  We did not receive your information…rinse and repeat.
5.    Common Sense.  This program was designed by former Investment Bankers, Politicians, and Finance Moguls.  When was the last time any of them had a problem getting a mortgage, got laid off, or faced foreclosure.  Probably never.  Real World people like Real Estate Attorneys, Mortgage Brokers, and Realtors  could have put a much better plan in place.  Give the people that deal with this stuff every day a chance and I guarantee we could come up with a better plan.

That’s my rant for today.  Topics coming soon:  Loan Modification, Short Sales, Foreclosure Lawsuits, and Things Lenders don’t want you to know.