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The foreclosure crisis reached its pinnacle four years ago, and while the foreclosure rate has dropped considerably since then, it remains a problem throughout the country. Policymakers are constantly developing new ways to help homeowners get caught up on mortgage payments and keep their homes. So far one of the most popular choices for fighting foreclosures was mortgage assistance programs designed to educate homeowners and help them in obtaining a loan modification or offer other foreclosure assistance.
A recent study conducted by the Richmond Federal Reserve suggests that these mortgage assistance programs aren’t having the desired effect.
Richmond Fed study
Since 2010, the Richmond Fed has been attending mortgage assistance events and speaking with homeowners. In order to determine the effectiveness of these programs and events, they gained permission from 120 homeowners to follow up on their progress for a year or so. The results were somewhat disheartening. According to the study, about 60% of homeowners who received help from a mortgage assistance program never did become current on their mortgage payments. The study found that those who were able to become current were those who were in the best position to do so. Those who had fallen behind on payments due to major financial setbacks such as the death of the main provider, disability, or sudden job loss, were for the most part unable to recover financially even with mortgage assistance programs.
About two thirds of the homeowners surveyed by the Richmond Fed were able to obtain a loan modification or refinancing. Unfortunately however, the study also revealed that the servicers were more likely to grant loan modifications and refinancing help to homeowners who were in the best position to succeed such as those who were currently employed. Even many who did receive assistance weren’t able to recover especially if they owed more than their home was worth or if they were suffering from an illness or disability.
Helping the right people
The Richmond Fed study was on a small scale and according to research economists that conducted the study, further research and analysis would need to be done before any conclusions could be drawn. They do seem to be in agreement however that the current mortgage assistance programs are not adequate for helping the hardest hit. According to research economist, Urvi Neelakantan, homeowners need to be educated about financial buffers so that they are in a better position to weather financial setbacks. Perhaps future programs will have a greater emphasis on educating homeowners in addition to offering assistance.
Business, real estate, and bankruptcy law and litigation news brought
to you by mbblegal.net
Source:
washingtonpost.com/business/capitalbusiness/mortgage-assistance-events-not-a-cure-all-for-homeowners-facing-foreclosure/2013/12/28/a2b02618-68d5-11e3-8b5b-a77187b716a3_story.html
A recent study conducted by the Richmond Federal Reserve suggests that these mortgage assistance programs aren’t having the desired effect.
Richmond Fed study
Since 2010, the Richmond Fed has been attending mortgage assistance events and speaking with homeowners. In order to determine the effectiveness of these programs and events, they gained permission from 120 homeowners to follow up on their progress for a year or so. The results were somewhat disheartening. According to the study, about 60% of homeowners who received help from a mortgage assistance program never did become current on their mortgage payments. The study found that those who were able to become current were those who were in the best position to do so. Those who had fallen behind on payments due to major financial setbacks such as the death of the main provider, disability, or sudden job loss, were for the most part unable to recover financially even with mortgage assistance programs.
About two thirds of the homeowners surveyed by the Richmond Fed were able to obtain a loan modification or refinancing. Unfortunately however, the study also revealed that the servicers were more likely to grant loan modifications and refinancing help to homeowners who were in the best position to succeed such as those who were currently employed. Even many who did receive assistance weren’t able to recover especially if they owed more than their home was worth or if they were suffering from an illness or disability.
Helping the right people
The Richmond Fed study was on a small scale and according to research economists that conducted the study, further research and analysis would need to be done before any conclusions could be drawn. They do seem to be in agreement however that the current mortgage assistance programs are not adequate for helping the hardest hit. According to research economist, Urvi Neelakantan, homeowners need to be educated about financial buffers so that they are in a better position to weather financial setbacks. Perhaps future programs will have a greater emphasis on educating homeowners in addition to offering assistance.
Business, real estate, and bankruptcy law and litigation news brought
to you by mbblegal.net
Source:
washingtonpost.com/business/capitalbusiness/mortgage-assistance-events-not-a-cure-all-for-homeowners-facing-foreclosure/2013/12/28/a2b02618-68d5-11e3-8b5b-a77187b716a3_story.html