A recent report
from the Special Inspector General's office that monitors the Obama administration's mortgage relief program paints a distressing portrait of that program.
The Home Affordable Modification Program, begun in 2009, represents the linchpin of the Obama administration’s attempt to help homeowners buffeted by the 2008-09 financial crisis.
But the report shows that of the 5.7 million homeowners who applied for relief since 2009, 72 percent were rejected by mortgage servicers, which include Citigroup, Bank of America, JPMorgan Chase and Wells Fargo.
"It appears that the program has allowed big banks to run roughshod over borrowers again and again," writes Gretchen Morgenson
of The New York Times.
"From the outset, Treasury’s loan modification program had problems. Among them were two design flaws: making the program voluntary for the banks and letting those banks that participated run the process on their own."
The banks, of course, beg to differ. They say 38 percent of rejections stem from the failure of applicants to complete paperwork or make their first payment under the program.
Meanwhile, the S&P/Case-Shiller 20-city home price index increased 4.9 percent in May, and new homes sales rose in June to the highest level since 2008. So all's well in the housing market, right?
Not exactly. "Bidding wars, a hallmark of last decade’s housing boom, are making a comeback in a number of metro areas across the U.S.," writes Wall Street Journal reporter Kris Hudson
. That includes thriving cities like San Francisco, Seattle and Denver.
"While the earlier wars reflected enthusiasm fueled by easy-money mortgages, the current froth stems from a market short of homes for sale," he says.
The inventory of homes for sale totaled 2.3 million as of May 31, which would last for 5.1 months at the current sales rate. In a healthy market, the figure would be six to seven months, according to the National Association of Realtors.
The problems include sluggish home-building and the reluctance of many homeowners to sell their abodes, Hudson explains. Their fear stems from worries that they won't qualify for a new mortgage, they can’t afford sales costs and that they'll lose out in the bidding war for their next home.
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