Obama plan’s start slow; foreclosure alternatives added
WASHINGTON – The Obama administration on Thursday outlined an expansion of its housing rescue plan that will help homeowners who face foreclosure because they are ineligible for current assistance programs.
Officials also provided a report card of sorts on how the home-loan modification and refinancing efforts are going since the housing rescue plan was announced in February.
The expanded program includes:
• Foreclosure alternatives. Homeowners unable to qualify for a modification will see a more streamlined process for pursuing short sales and deeds-in-lieu of foreclosures, which transfer a home back to the lender. The goal is to help homeowners avoid a foreclosure that could lead to a severe hit on their credit scores.
A short sale occurs when a home is sold for less than the remaining mortgage, but lenders agree to consider the debt paid.
• Protections for homeowners whose home value has fallen. Under a $10 billion program, new incentives will be provided to lenders to help them make modifications in regions where home prices have had steep drops.
The Obama administration has said it expects up to 9 million homeowners to get help through mortgage refinancing and loan modifications.
But the complexity of the program has made for a slow start and done little to dampen foreclosures, which have risen as banks ended temporary moratoriums on foreclosures.
“It’s been slow. The foreclosure problem is not going away,” said Mark Zandi, with Moody’s Economy.com.