The Obama administration is ready to ramp up its program to modify mortgages to stem foreclosures. It sounds great on paper, but this program will continue to be an epic failure for one simple reason: there is little or no help for the unemployed.
The only sliver of hope for those who have lost jobs has been filing for bankruptcy, but this is only a band-aid, delaying the inevitable. The bankers have the courts in their back pockets, making backdoor deals with judges to overturn bankruptcy protection on very surreptitious grounds.
One homeowner filed for bankruptcy, but fell behind on payments again. He was allowed to come up with half the arrears, but the mortgage company forced him to sign a ‘strict compliance agreement,’ which meant if any subsequent payments were late for the ensuing twelve months, the courts would remove bankruptcy protection. He did in fact make several late payments subsequently. The mortgage company declared that the payments had not been made at all to the courts. This was not true and he had documents to show that the payments were made. His attorneys did nothing to protect him, since his payments were late. They would'nt even return his calls.
He is now in foreclosure and will be required to pay up all arrears prior to bankruptcy plus current arrears, late payments and legal and administrative fees. This amounts to an astronomical amount of money.
My point is simply this: the country is now facing a tidal wave of unemployment. Banks don't care about folks who can't pay. Banks are in the business of making profit. They can't make money on the backs of the unemployed. In order to modify a mortgage you must have some documented source of income. A moratorium on foreclosures for at least twelve months will give homeowners a chance to ride out the recession and get back on their feet and is the only solution for this crisis.