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What Have We Learned About Foreclosure From The Government And Obama?
The politicians and the President have a new plan to help homeowners fight foreclosure. We refer to it as the "Obama Plan". Many Americans are hoping for the best, but if experience has shown us anything, we know it's always best to have a back up plan.
You'll likely remember last years $320 Billion "Hope For Homeowners" program. This was the presidents attempt to provide help then, which seems to have been a huge disaster. The plan was supposed to provide funds to help homeowners refinance and the funds was supposed to help servicers provide new loans. The program was touted as the savior for borrowers who needed foreclosure help.
The end product, according to Fox news, was a single saved home. That's right...one single home. Don't get me wrong, I am, sure that one person is endlessly grateful, but $320 Billion to save one home? How could this possibly happen!
My simple explanation for this is that congressmen know absolutely nothing about saving homes from foreclosure. In fact, I would be surprised if anyone who played a part in that bill ever saved a single home from foreclosure, prior to that one home.
Now, ...
... the latest "Obama Plan" fiasco:
Obviously, after this last experience with the presidents "bailout plans" we didn't have high expectations for this one either. And others agree; according to the Wall Street Journal headline article of April 15th 2009, GMAC mortgage now estimates that only ten percent of borrowers in trouble will be helped by the Obama plan. Wait just a second! What happened to the 4 million homeowners that were supposed to be helped, as claimed by the politiciant? The Wall Street Journal is a pretty well know newspaper and GMAC is a top lender, so I tend to take what they say pretty seriously, But it doesn't end there.
MSNBC talkshows last week decided to do their own undercover work and find out how helpful this new bailout plan would actually be. One of their employees actually tried to find help under the new Obama Plan.
These where his unsuccessful and scary results:
1. In the majority of instances, he could not reach a loan servicer to provide any help at all, and
2. Where he did actually reach someone, no one could explain if he would qualify for the Obama plan, or even provide much further assistance about finding out how to qualify.
3. Other not-for-profit companies were not any better.
It seems, as usual, no one really understands what's going on and no one wants to make any changes to make it easier for Americans facing foreclosure.
When it comes right down to it, an experienced (for profit) company, operating legally, will have an infinitely better chance of helping you with a solution when you are facing foreclosure. Lenders and not-for-profit companies simply don't have the finances, experience, or the employees to help the number of people facing foreclosure.
Another big part of the picture is incentive. What incentive does a not-for-profit have for helping your family? They get paid no matter what and they don't earn much, so they can't afford to hire someone experienced enough to get the best modification for you. A for-profit company only gets paid on a successful modification, so they have a huge incentive to get you an affordable loan mod and to do it quickly.
As for the Obama plan; it's great for the 10% who qualify, but everyone esle better start making plans to stop foreclosure yourself, or find a professional who can do it for you.
As industry professionals already know, it's not possible to think that one government plan can save every house in the USA. Foreclosures will never come with a one size fits all "government" solution. Each family needs to be helped individually and they almost never fit into a similar mold.
Like always, we recommend choosing three possible solutions to get your mortgage back on track. Never rely on one option and never, never, never, rely on the government to bail you out, just feel happy and very lucky if you are part of that 10%!
Nick is the writer of the ForeclosurefishStop Foreclosure Blog, website helps homeowners who are facing foreclosure and need help stopping foreclosure.
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