Unable to stem foreclosures, Obama tries the next best thing

Although President Obama launched the Making Home Affordable program to great fanfare in March, the actual results have not been impressive. He projected that the program would help nine million people keep their homes. Lenders representing 75 percent of U.S. mortgages agreed to participate. Yet so far, just 50,00 homeowners have been offered lower-cost mortgages. Obviously, the banks said one thing and have been doing another.

With foreclosures accelerating, and a major blow to its credibility looming, the administration is now giving banks another option for, if not helping people stay in their homes, at least allowing them to hold onto some shred of financial security. The government will pay institutions participating in the Making Home Affordable program incentives for allowing short sales and deeds in lieu of foreclosure. Lenders will get $1,000 for allowing a short sale or deed in lieu of foreclosure, and former homeowners who lose their home will get $1,500 for relocation expenses. Prior to this, incentives were only given for loan modifications.