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Mortgage Aid Program Doesn't Go Far Enough, Panel Says

A group overseeing the financial bailouts says the mortgage aid program advocated by the Obama administration doesn't help enough families

President Obama unveiled his plan to help homeowners affected by the financial crisis in February. The plan aims to keep more than 9 million people from losing their homes by making refinancing easier for people who owe more on their mortgages than their homes are currently worth and by providing incentives for mortgage lenders to help homeowners on the brink of foreclosure. Speaking in Phoenix, Obama said that the $75 billion plan was designed to address "a crisis unlike any we've ever known" and would forestall "the worst consequences of this crisis from wreaking even greater havoc on the economy."

In a report released this week, the Congressional Oversight Panel criticized the plan, saying that the administration projects only one million families will end up with lower monthly payments as a result of the program. The report warned that borrowers who have their monthly payments lowered as a result of the program still could lose their homes because the payments remain too high.

Treasury spokeswoman Meg Reilly replied that the program was not designed to prevent every foreclosure, and "we cannot help those who simply bought a home they could not afford." By some analyst's estimates, reducing home loan balances so that no homeowners would owe more than the value of their homes would cost up to $900 billion, with $150 billion of that borne by the government.

Through March 2010, more than 230,000 homeowners have completed mortgage loan modifications. That amounts to only about 21 percent of the 1.1 million borrowers who began the program over the past year.

Some Congressional republicans have criticized the administration's efforts and say that the Obama administration should abandon the effort and focus on creating jobs instead.
Published Apr 14 2010, 05:28 AM by moneycoach
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