Foreclosures Down 2% in February: Don’t Pay Attention to the Headlines….

Don’t pay attention to the headlines – foreclosures down 2%.   Instead, look at the rest of the story:

• Foreclosures are up from last year.
• Foreclosures aren’t up as much as in the past, but they have been up on a year over year basis for 50 months in a row.
• Look at the quote that the CEO of Realty Trac says below.   It’s not that the foreclosure problem is done or even getting better, it’s just that certain programs are slowing down the process.  (Isn’t that called kicking the can down the road?)

This illustrates again why I’m writing under a pen name.   If you talk to “banks” they’ll say, “See, Foreclosures are down, the worst is over, all is well.”

I’ll tell you the truth as I see it, even if the banking industry doesn’t like it.

KH

via Foreclosures Down 2% in February: RealtyTrac « HousingWire.

James Saccacio, CEO of RealtyTrac, said the 6% increase from last year was the smallest since January 2006, but it was the 50th consecutive month of yearly increases.

“This leveling of the foreclosure trend is not necessarily evidence that fewer homeowners are in distress and at risk for foreclosure, but rather that foreclosure prevention programs, legislation and other processing delays are in effect capping monthly foreclosure activity — albeit at a historically high level that will likely continue for an extended period,” Saccacio said.

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

Please tell me my numbers are wrong….

Okay, here are some scary numbers……

• Fannie and Freddie own 131,000 properties between them (as of the end of 2009)
• They sold 200,000 units in 2009 that they “inherited” from people who defaulted.
• But they own more now than they did at the end of 2009 (the situation is getting worse rather than better)
• This doesn’t count the homes that HUD owns due to FHA foreclosures.

Now here’s the scary part:

• There are around 5,000,000 homes that have “severely troubled” loans on them.
• Fannie and Freddie back approximately $5 Trillion (that’s $5,000,000,000,000) in mortgages.
• Assuming that the five million of troubled loans average $150,000, that’s approximately $750,000,000,000 (billion) in troubled loans, or about 15% of their total pipeline.

If you look at this chart from Calculated Risk, you can see Fannie’s delinquency rates:

Did you notice how it has the trajectory of a space shuttle?

And it’s only at just under 6%?

Let’s say that the number of seriously delinquent homes that end up being Fannie or Freddie owned (don’t recover and don’t short sale) ends up at 9% (3% higher than the current seriously delinquent rate) but 40% lower than the total troubled loans.

That means that based on those numbers…….

2,000,000 homes will become REO before this is all over.    And that assumes that there aren’t any additional loans that become troubled and eventually become REO.

And now let’s apply the Vanderwell rule of 50% and assume that the numbers are 50% lower than that.    That puts us with…..

1,000,000 homes that will be REO before this is all over.

And now let’s apply the Vanderwell rule of 50% and assume that the numbers are 50% lower than that.    That puts us with…..

500,000 homes that will be REO before this is all over.

So, even if the calculations are reduced by 50% twice, we still have 2 1/2 years worth of inventory to work through before the REO for Fannie and Freddie is “gone.”

Please tell me my numbers are wrong.

So what does that mean?

• It means that the US Treasury isn’t anywhere near done writing checks to keep Fannie and Freddie floating.
• It means that we’re going to continue to see tightening in the mortgage world.
• It means we’re going to continue to see pressure (downward) on home prices.
• It means we’re going to see upward pressure on mortgage rates as people get scared to invest in mortgage backed securities.
• It means that the taxpayer is going to have a larger and larger bill to pay to subsidize the housing market.
• It means that Fannie and Freddie are on their way to being the largest landlords in the country.

It also means, as the article in the New York Times says, that “we” need to be looking at and preparing for the long term picture.    What do we want the role of the government to be going forward?    How can we “extricate” the taxpayer out of the mess that we’re in?   How can we continue to pay the bills?

Please tell me my numbers are wrong.

But I’m afraid they aren’t wrong enough to make a difference.

KH

Reuters Breakingviews – The Dark Side of Home Subsidies – NYTimes.com

The government-run mortgage finance agencies Fannie Mae and Freddie Mac owned more than 131,000 properties between them at the end of 2009, according to recent annual filings. That’s roughly the equivalent of San Francisco’s owner-occupied housing stock. The two companies sold off nearly 200,000 units last year that they took over after owners defaulted. But despite those efforts, Fannie and Freddie owned substantially more units at the end of 2009 than they did a year earlier.

And things are set to get worse. Barclays Capital estimates the pipeline of severely troubled loans at around five million across the United States. Modification programs, which should help some borrowers stay in their homes, have also delayed the inevitable forfeiture of many others.

Fannie and Freddie end up owning properties because they provided guarantees for the benefit of mortgage investors. Between them, they back around $5 trillion of American home loans. Such support — once implicitly and now explicitly backstopped by the Treasury — has handed borrowers relatively low financing costs for years.

Now, though, the result is that aside from the huge financial burden they place on taxpayers, the two companies have been amassing foreclosed properties and, in a few cases, have become landlords.

It’s a tiny part of their operations for now. But if the housing market doesn’t turn around soon, the companies could find themselves reluctantly managing more properties. And no one expected, or wanted, Fannie and Freddie to become giant public-sector landlords.

The immediate task is to clean up the mess, but policy makers need to think about the longer term. That means recognizing that the policy benefit of subsidizing home ownership has reached its limit, and starting to take the government out of the mortgage guarantee business altogether.

Technorati Tags: Fannie, Freddie, REO, New York Times

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

Housing Prices in Michigan

I found this chart in the Detroit Free Press.   It illustrates the challenges that we’ve got in Michigan…..

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

How to Fix The Water Problem….

What?  Are we now talking about plumbing problems here on Straight Talk?   Nope.

We’re talking about underwater mortgages.    You know, the situation where people owe more than what their house is worth.

So what’s the scoop and how do we deal with it?

• The scoop – the property values were vastly over inflated by the housing bubble of the last 5 years.
• Many people took advantage of the low downpayment programs and bought houses with little or no money down.
• Those people are now looking at a situation where they owe more on their house, in many cases substantially more, than their house is worth.

So what are the options?

Frankly, none of them are good, but there are some options:

• A government bailout – like it says in the article from the Free Press – the only thing people dislike more than bailing out the banks is bailing out their neighbors.   So, using substantial amounts of taxpayer money to reduce the principal amounts of the mortgages for underwater borrowers would be politically extremely challenging to get through.
• Do Nothing – let the markets work things through.   What would that mean?   A couple of things:  1) a long slow protracted recovery for the housing market.  2) additional pressure on the banking and mortgage environment with additional losses for the banking world and tightening mortgage guidelines.   3) an ongoing drag on the overall economy – the housing market typically leads the economy out of the woods but if it’s going to linger in the doldrums, that will be a drag on the economy  4) An ongoing drag on the jobs market – why a drag on the jobs market?   Geographic mobility will be limited because people can’t sell their houses to pursue jobs in other locations.
• A “combination” bailout – this is an idea that I’ve discussed before and I’ll attempt to write more on it some additional time.   I call it a combination bailout because it would allow for a couple of different things.

What’s a combination bailout?

• An acknowledgment that the mortgages on the books of the banks, Fannie Mae, Freddie Mac and the other financial institutions are not worth their “book value.”    A $100,000 mortgage on a $70,000 house is not worth $100,000.   The sooner this fact is faced, the better off we’ll be.
• So, I’m proposing that the financial institutions take an immediate 15% adjustment to the value of their mortgage backed securities and mortgage loans.   How did I come up with that number?  I pulled it out of a hat but it’s somewhere close to 10% less than the amount that property values have actually fallen.
• At the same time that happens, all mortgages (first and second liens that are NOT credit lines) will see both the principal balance and the corresponding payment reduced by the same 15%.     This will provide both monthly payment relief for all borrowers and will also allow many of them to sell who couldn’t otherwise.
• The reduction in values will significantly impact many financial institutions balance statements.   Some of them will be weakened to the point of needing to be “merged” into other organizations.    Some will close.     That’s painful but it’s okay.
• At the same time, all homeowners will benefit because they will see a drop in their monthly payments and they will have reduced monthly payments.
• What about non-homeowners?   Or people who have their houses paid for?   They would receive a tax credit (not a deduction) equal to 15% of the median house price in their state.

So what would that give us?

• A smaller banking system but one with a more realistic valuation of it’s assets and therefore a healthy banking system.
• Homeowners who are in a better shape financially because they have either less negative equity, they have enough equity that they can move if they want or need to, and their monthly cash flow is better.
• Those who don’t have mortgages will see a boost to their cash flow so they can either: 1) Save the money and help the banking system or 2) Spend the money and stimulate the economy.

How much would it cost the government?

Frankly, I don’t know but I expect that it wouldn’t be as much as many of the bailout things that have been proposed in the past for a couple of reasons:

1. If we are removing the assets from the banks books and at the same time removing the debt from the consumer’s side, that should balance out.   The only thing it would require is FDIC money to cover any banks that go under because of the falling of their book values.
2. The tax credit would cost some substantial dollars but at the same time, the money would spur the economy and would therefore increase tax revenues.

So, what do you think?  I know the logistics of it have a lot to be worked out but it seems to me that this would work better than giving the banks and the sellers $1000 each on a short sale (see the next post I’ve got going up for some thoughts about that).

Let me know your thoughts….

TV

Solutions aren’t easy for underwater mortgages | freep.com | Detroit Free Press

If there is anything the American public dislikes more than bailing out the bank, it’s (bailing out) their neighbor,” Gordon said.

Still, she said, the problem of underwater mortgages — where the homeowner owes a lender more than the house is worth — should concern everyone. “If your neighbor goes into foreclosure, it brings your home value down,” she said.

Some experts advocate for a federal bailout for underwater mortgages. That would cost about $801 billion, more than the original 2008 bank bailout, according to First American CoreLogic, a real estate data firm.

It will take time, money to heal housing market

In Michigan — where home prices have dropped more than 35% from their 2005 peak — home values are expected to fall another 22% statewide over the next five years.

In the same period, they’re forecast to drop 30% in metro Detroit, according to Dennis Capozza, a University of Michigan finance professor. Capozza also is a principal in University Financial Associates, a mortgage-risk advisory firm in Ann Arbor, which sells quarterly house price forecasts to its clients, including lenders and rating agencies.

Technorati Tags: Underwater Mortgages, Straight Talk About Mortgages

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

Home Prices Going Up? Don’t Hold Your Breath!

Housing Wire has the story about how analysts from Barclays are predicting only another 4 to 5% drop before things stabilize.   But they are also predicting that we’ll see basically zero appreciation for several years.    Why?    A couple of things:

• There are a LOT of foreclosures that have been temporarily stalled due to loan modification programs and very few of those are actually going to work long term.
• Because of that, as soon as we see any “sign” of increased appreciation, we’re going to see the backed up inventory (foreclosures, temporarily stalled foreclosures, sellers who just want to move etc.) flooding the market.    And that’s going to put downward pressure on the market again.

So what does this mean for the mortgage world?   A couple of things:

1. Assuming that we aren’t going to see strong appreciation means we’re also not going to see relaxation of underwriting guidelines any time soon.
2. Stability in prices means that we will probably see a stabilizing in the losses at Fannie and Freddie, but not a marked turnaround in their fortunes or their ability to do anything other than very conservative lending.

In other words, the house isn’t burning down right now (like it was in the fall of 2008) but it’s going to be a long road from here out of this mess.

Stay tuned……

Home Prices Will Not go up Anytime Soon, Say Analysts « HousingWire

The rate at which home prices are dropping may be slowly coming to a halt across the United States, with analysts at Barclays Capital predicting only a 4 or 5% dip left to go before stabilization. But the rate of appreciation on the back side of that bottoming out is likely to “muddle along for the next few years,” they say in a weekly letter to investors.

This conclusion is based on expected aftershocks of the “smoothed-out” housing supply model, where millions of potential foreclosures are being averted temporarily with government-backed programs or by suppliers slowing the rate in which foreclosures hit the market. On the positive side, they say this effort actually prevented home prices from falling considerably more.

Technorati Tags: Real Estate, Home Prices, Fannie and Freddie, Straight Talk About Mortgages

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

Existing Home Sales – a Mixed Bag….

Okay, this is another one of those “mixed bag” reports:

• The market was clearly expecting some pretty good numbers.   The report came in well below what the market expected and down 7.2% compared to December’s sales.
• This tends to lend credence to what happened with the cash for clunkers.   What happened?  It appeared to be a success, they extended it and it faltered after that.   If extending the homebuyer’s tax credit was a great thing, we’d see houses still selling well, wouldn’t we?
• Comparing sales in January 2009 vs. January 2010, sales are actually up from last year 11.5%.   This adds credence to the concept of a “muddle along” recovery.   Things aren’t good, but they are less bad than they were a year ago.

So, is it a good report, nope.    But is it an absolutely horrendous report?   Nope, not that either.

Existing-Home Sales Plunged Unexpectedly in January – CNBC

Sales of previously owned homes in the United States unexpectedly plunged in January, an industry survey showed Friday, fresh evidence the housing market has yet to find stable ground.

The National Association of Realtors said that sales fell 7.2 percent to an annual rate of 5.05 million units, sharply below market expectations for a 5.50 million unit pace.

December sales were revised slightly lower to 5.44 million pace from 5.45 million units. Compared to January last year, sales of existing homes were up 11.5 percent.

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

TARP Money? Color me skeptical…..

Okay, color me a serious shade of skeptical…..

President Obama and his crew announce a plan to use $1.5 Billion (that’s a B) of TARP money (wasn’t TARP money supposed to bail out the banks?) to stabilize the housing market?    Okay, let’s take a look at a few facts:

• Between Fannie and Freddie, they control somewhere in the neighborhood of $4 Trillion in mortgage loans.     And they think that $1.5 Billion is going to stabilize the market?
• They describe how they are going to let the state housing agencies design programs that will address the urgent needs.     Am I the  only one who finds this statement ironic?  Since when has the Federal government let the state government design a program and it was fast enough to address an urgent need?

This next is a quote from the Whitehouse Blog (yes apparently even they blog!):

The types of programs that may be funded include: measures for unemployed homeowners, programs to assist borrowers owing more than their home is now worth, programs that help address challenges arising from second mortgages,; or other programs encouraging sustainable and affordable homeownership.

Okay, a couple of problems that I have with that statement:

1. Mesasures for unemployed homeowners?   The only thing that I can see where that would work is if the government started making house payments for unemployed borrowers?   How far do you think $1.5 Billion would go for that?
2. Assist Borrowers who owe more than their home is worth.   Let’s think about that one for a second.    The last statistics that I heard for Michigan showed that 45% of all homeowners who have mortgages are underwater.    How far is $1.5 billion going to go?
3. Challenges from second mortgages?   Like what?  How to pay them?

When the “Obama Refi Plan” came out, it was touted like it was going to save the housing market.   The same type of “spin” is being use for this one.

Don’t hold your breath.

Pelosi Says Obama’s New $1.5bn Plan Will Stabilize Housing « HousingWire

Friday, February 19th, 2010, 1:33 pm

[Update 1 adds program details.]

President Barack Obama is announcing a plan to allocate $1.5bn of Troubled Asset Relief Program (TARP) funds to aid homeowners in select states, to the support of the House Speaker.

Treasury Department policy adviser Sarah Apsel, in a posting on the White House blog, said the program will apply to states where house prices have fallen more than 20% from their peak.

“Such price declines, coupled with the effects of high unemployment, means that many working and middle-class families in these areas are facing serious challenges,” she wrote. “The effort we are announcing today will provide support for state housing finance agencies (HFAs) to design programs tailored to the urgent needs of particular communities.”

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

National Association of Home Builders Index

Okay, a couple of things about this chart:

• Thanks to Calculated Risk for the great chart again.    Bill, you do great stuff!
• Yes, the chart is “off the bottom” compared to a year a go.  
• But anything less than 50 means that more builders think the market is tough than think the market is good.

So, that means that basically over 80% of the builders survey say it’s tough out there.Why?’  A number of issues, but one of them is the withdrawal of the “easy credit” drug that was fueling the housing boom.

More later,

”Sean”

Shadow Inventory – aka Why It’s Not Over Yet….

Okay, time to get back at it and talk about some of the not so pleasant things going on in the mortgage and real estate worlds (that is why it’s called Straight Talk!)

Below are excerpts of an article from over at Housing Wire Magazine.    Let me make a couple of main points in terms of what I agree with and what I don’t.

What I agree with:

1. I agree that the shadow inventory of homes is going to be an ongoing problem.   There are a lot of homes that are either already in process of foreclosure or heading that way and eventually the banks are going to have to deal with them.  
2. There are a lot of people who are currently “hanging on” by a thread and making their payments but are going to have something happen and end up defaulting on their mortgage.

What I don’t agree with:

1. I think it’s worse than a 33 month drag on inventory.   Why?   As best as I can tell, the 33 months assumes that no other homes would come on the market.    None?   What about the people who get transferred?   What about the couple living in a 2 bedroom condo who are expecting their third child?   It’s not realistic that there will be NO “regular” people putting their homes on the market.   So, how much longer will it be?   I wouldn’t dare venture a concrete guess, but I think 20% longer than what they say would be something we’d be fortunate to have.
2. They don’t seem to factor into consideration the modified mortgages that “go under” for a second time.    I’ve heard statistics that say anywhere from 40 to 70% of the loans that have been modified will end up redefaulting.    That’s going to add to the inventory.
3. The people who just “want to sell.”    I’ve read a number of articles about people’s intentions “when the market turns around.”    A survey by Zillow showed that upwards of 50% of people surveyed said that if they saw signs of the market turning around, they’d put their house on the market.   So there’s another “boost” to the inventory levels.

In summary, the concept of an elevated level of shadow inventory is not in question (if you don’t agree, let me know.)    The question is the degree and the level of drag that it’s going to be on the housing market.

It isn’t going to help matter.

“Kenny”

Shadow Inventory of Homes to Take Nearly 3 Years to Clear: S&P « HousingWire

The “shadow inventory” of bank-repossessed properties, as well as distressed mortgages facing foreclosure, will take nearly three years to clear at the current sales rate, according to a report from the credit rating agency Standard & Poor’s (S&P). ……..

The “shadow inventory” of homes includes all delinquent loans and real-estate owned (REO) property that has not reached the market. …….

……S&P estimates the inventory to equal a 33-month supply of homes. Analysts added the estimate is actually conservative, as they did not assume homes not showing signs of distress would default and push the overhang of supply even further……..

“Overall, it is our opinion that recent positive housing reports should not be construed as a sign that the distress in the residential housing market is abating, but rather should be attributed to the temporarily limited supply of homes on the market,” according to the report.

Another credit rating agency, Moody’s, showed that the underwhelming performance of the Home Affordable Modification Program (HAMP), which the US Treasury Department launched in March 2009 to give incentives to servicers for the modification of loans on the verge of foreclosure, will drive down housing prices another 8% from Q409 to the end of 2010.….

“We believe that the recent constriction in the supply of foreclosed homes on the market is a temporary one,” claim the analysts.

“Loan modifications and the observed extension of time distressed loans remained as such may simply have delayed the inevitable, creating the demonstrated shadow inventory of troubled loans,” they wrote. “Ultimately, the majority of the properties these distressed loans represent will likely have to be liquidated.”

Write to Jon Prior.

Technorati Tags: Shadow Inventory, Real Estate, Straight Talk, Mortgage

You know, 20 years ago, we didn't need Straight Talk in the mortgage world.   Everyone did the right thing and everything moved along......

Now we do.   Would you like to work with a lender who will tell it to you straight?    Would you like to have someone looking out for what's best for you?

Would you like to work with a lender who has to blog under a pen name - because their bank doesn't like what they are saying?

If so, call us at 330-536-3623 or send an e-mail to info@straighttalkaboutmortgages.com and we'll have one of our team of lenders get back to you, typically within 4 hours during normal week days.

Kenny H.

Government Loan Modification Program – Delaying the Inevitable?

An interesting and thought provoking article in the New York Times about the mortgage modification program that the government has been pushing as their “remedy” to the housing problems.    A couple of main points:

• It has failed to provide permanent relief for struggling homeowners and has therefore raised false hopes and encouraged people to avoid making the difficult decisions that they should be making.
• By delaying people from making the difficult decisions, the government is prolonging the housing market’s necessary adjustment and working through the pricing adjustments needed to get back to the point at which incomes and house prices are in line.
• With the unemployment situation as it is (I think it’s over 7 million jobs lost since this all started?) there are a lot of people who are in homes that they can’t afford any more.   The sooner we, as an entire housing and mortgage industry, can adjust to that fact, the more quickly we can return to health.

I think there are two things that this article doesn’t take into consideration:

• One of the main reasons that the modifications aren’t working well is because they aren’t substantial enough to get to the point of people actually being able to afford to keep their house.    Whether your interest rate is 2% or 8%, if you don’t have enough income to make the payments, it’s not going to matter.    It’s called principal reductions.   Without principal reductions, the loan modifications aren’t going to work.
• The “justification” of giving breaks to some people when they are struggling but not others?   According to the last statistics that I saw, 85% of the loans that Fannie Mae and Freddie Mac have are making their payments on time.   So how do you mesh those two statements?    How do you mesh the problems with those who don’t have problems?

Tom Vanderwell

Mortgage Modifications Are Seen as Adding to Housing Woes – NYTimes.com

The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good………

Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes…….

Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.

The Treasury Department publicly maintains that its program is on track. “The program is meeting its intended goal of providing immediate relief to homeowners across the country,” a department spokeswoman, Meg Reilly, wrote in an e-mail message.

But behind the scenes, Treasury officials appear to have concluded that growing numbers of delinquent borrowers simply lack enough income to afford their homes and must be eased out.

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