March 3rd, 2009
03:05 PM ET
6 years ago

Obama to test home loan do-overs

Mortgage modifications have a bad rap, yet President Obama is depending on them to stop the foreclosure crisis.
Mortgage modifications have a bad rap, yet President Obama is depending on them to stop the foreclosure crisis.

NEW YORK (CNNMoney.com) – Mortgage modifications have a bad rap, yet President Obama is depending on them to stop the foreclosure crisis.

Modifications continue to be pushed as the best way to get struggling borrowers back on their feet. The jury is out on whether modifications work long-term. One recent study showed about half of borrowers with modified loans fell behind within six months.

Still, Obama is giving modifications a central role in his $75 billion foreclosure prevention program.

The program, which starts on Wednesday, calls for loan servicers to lower struggling borrowers' interest rates to 31% of their gross income. The government will subsidize part of the reduction, as well as kick in incentives for the servicers, borrowers and mortgage investors to participate in the modifications.

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Filed under: President Obama
soundoff (61 Responses)
  1. Mark, B'ham., Al.

    I went through a foreclosure and had to work my credit back up and save a down payment to buy another house so I cannot feel sorry enough to want tolet the government take my hard earned money in taxes and bail someone else out. I have given up alot to get a house like vacations, eating out, and not getting the car I would have really liked. They can too make the sacrafice to fix their credit and recover instead of asking for a handout. In alot of these states the price of a house was rediculous and need to correct itself as the stockmarket does. Every bubble will eventually burst!

    March 3, 2009 05:49 pm at 5:49 pm |
  2. mattie

    tsk tks Sandy, what kind of hope and change do you believe in, calling people names like that. Just so you know, the choice wasn't Bush or Obama, Bush wasn't running. I didn't vote for Bush either, but that doesn't mean I want Obama to ruin America with all his give aways. Now remember Sandy, before you call other people haters in your post, you might not want to call them names first. It really makes you look like a hypocrite, are you a hypocrite Sandy, sure sounds like it. Maybe you need a refresher course, say it again and again....hope and change, hope and change....

    March 3, 2009 05:56 pm at 5:56 pm |
  3. fed up

    I lost my job in 2001 due to things beyond my control. I could not afford my mortgage payment. What did I do? I got the best job I could, then took a second job delivering newspapers every night, sold my house, and moved my family into a smaller, much more affordable home. Amazingly, I did all this without any government help. Hey Americans, quit your stupid whining, grow a backbone, and quit expecting someone else to take care of you.

    March 3, 2009 05:57 pm at 5:57 pm |
  4. Get Real for just a minute

    People do not borrow homes. They borrow money and use that money to buy a home. If they put that home up for collateral and don't pay the money back then the collateral ( i.e., the home ) goes to the bank. The lenders don't want your home, really. They lose money on that and it's a PITA to get rid of.

    Here's a four letter solution to the foreclosure crisis: RENT!

    Get the government out of this obscene mess. In the long run this is a really bad idea. Watch and see how ugly it gets.

    March 3, 2009 06:08 pm at 6:08 pm |
  5. Sniffit

    And a big old STFU goes out to all the Limbaugh/Coulter parrots out there who were screaming "where's the help for the people in foreclosure?" when it wasn't in the stimulus plan because it seemed like a good talking point to get people angry about the stimulus plan...but who are now all just attacking the mortgage foreclosure plan blindly without any basis. Do you even keep track of the positions you take to make sure you're being consistent, or is it always just a choice between "the opposite of what Obama said" and "whataver Limbaugh/Coulter/Hannity/O'Reilly told me to say"?

    March 3, 2009 06:08 pm at 6:08 pm |
  6. Sniffit

    @ Proud American

    You're one to talk about "buzz words" oh he who regurgitates the "socialism" and "comrade" talking points solely for the purpose of attacking the Obama administration to gain political leverage for the GOP. YOupeopel are so full of it I'm just waiting for one of you to pop.

    March 3, 2009 06:13 pm at 6:13 pm |
  7. arithmetic is liberal

    So fed up:

    If you could have a better situation for your family, even if it meant accepting "governemtn help", would you?

    Because me, I'd do anything for my family, including sacrificing someone else's rhetorical view point.

    But then again, I'm not a fool.

    Enjoy serfdom.

    March 3, 2009 06:25 pm at 6:25 pm |
  8. arithmetic is liberal

    To the people who want others to go it alone:

    If your nieghbor's house was on fire, would you help them put the fire out, or wait for it to spread to your house on the prevailign wind?

    Please remember: every home in foreclosure in your neighborhood = a 9% decrease in the value of your own home.

    Do the math.

    March 3, 2009 06:31 pm at 6:31 pm |
  9. Ray Fisher

    Breaking news Mr. President, the recession, depression, downturn, collapse or whatever has created a open season on consumers for every cheat, fraudster, flim-flam man, crook and no-account con artist or politician within earshot. No recovery can possibly occur in this environment as at least during the Great Depression, civility survived but we haven't any civility remaining in America since Bernie Madoff!!! Prepare for disaster everyone!!!

    March 3, 2009 07:13 pm at 7:13 pm |
  10. Vegas

    I have no issues with helping those homeowners who had mortgages they could afford but were laid off due to the current economy and can no longer afford those homes.

    My issue is with the people who CLEARLY could not afford the homes they bought but thanks to some fancy footwork ,the banks were allowed to do to get these people into homes. If you make $50,000 a year, what makes you think you can ever afford a half million dollar home–unless it's a 1.9% ARM that will go up to prime plus 12% after 2 years. This is exactly what happened in many areas. Another favorite is giving loans to people who were allowed to "declare" income without ever providing proof.

    I feel for those who were in homes they could afford but now can't because they've lost their jobs. The rest of you are just idiots and need to take some responsibility instead of just putting the onus on the big, bad banks.

    March 3, 2009 07:21 pm at 7:21 pm |
  11. Franky

    Well...if they invest our money into us maybe they'll have extra cash to pay for it, LOL!! With those tax breaks and that bit of a cash, it makes our system look like a genius....

    March 3, 2009 07:23 pm at 7:23 pm |
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