Mortgage Relief, or More Delay?

Underwater and waiting to exhaleAccording to a draft proposal obtained by the Wall Street Journal and some others, the Treasury Dept. is toying with the idea of giving distressed homeowners 30 days to respond to a mortgage lender after being turned down for a mortgage modification---you know, the type most folks haven't been able to obtain anyway.

During the 30-day response period, while the homeowner is presumably appealing the decision, the home could not be put up for sale at auction.
(Servicers would also have to provide written certification that a borrower isn't eligible for HAMP before a foreclosure can proceed).

With so many homeowners "underwater" and vulnerable to foreclosure, Is delay the answer? Treasury officials apparently thinks so.The Journal quotes an unidentified Treasury spokeswoman as saying the 30 day delay proposal is just one of "many ideas under consideration in the administration's ongoing housing stabilization efforts." She goes on to say the proposal has not been approved as yet and that no announcements are expected right now.

Of course, should such a program go through, one wonders what an extra 30 days would really do for the distressed homeowner? Those seeking a loan modification can usually get the three-month trial run; it's the permanent modification that has been ridiculously hard to come by (although the numbers were up in January). Why a four-month rather than three-month waiting period would make all that much difference is, frankly, beyond me.

But one thing it would do is, for a short amount of time anyway, create the appearance that the foreclosure problem might be abating somewhat. The more homes that can't be foreclosed upon for an extra 30 days means a lower reported figure when quarterly foreclosure reports are calculated.

Various other delays have already led to an estimated backlog of nearly 3 million households that are 90 days or more late on their mortgage payments, but not in foreclosure... yet!

A more suspicious person than myself (which, I grant you, might be difficult to find, even with GPS) might wonder what the true purpose of such a 30-day delay would be and just might conclude it would have little to do with actually helping people keep their homes.

Charles Feldman is a journalist, media consultant and co-author of the book, "No Time to Think: The Menace of Media Speed and the 24-hour News Cycle." He has written about real estate related issues for several years.
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