Keep in mind, though, that the mortgage loan modifications are only for people who are already behind on their payment. If you are a responsible borrower who makes your payments, who abides by the contract you signed, and who makes prudent choices that allow you to live within your means, do you think you will qualify for a mortgage modification?Asking Congress to encourage morality is like asking a drunk to come down on the side of sobriety. Ain't gonna happen.
Ultimately, it is simply unfair for the government to create loan modification programs that benefit the borrowers who fail to follow the rules by defaulting on their payments. This fosters an attitude in which morality is thrown out the window. Instead, people intentionally decide to stop making payments, thinking exactly what my clients tell me: If I stop making payments, I will be able to negotiate lower mortgage payments. But if I keep making payments, I won’t have a shot.And of course, if people really can't afford their homes - and most people can't today - then they can't afford their homes if you tweak the interest rate a little bit. So the modification programs don't work.
More than half of loans modified at the beginning of 2009 defaulted by year’s end, reported the federal government in March 2010. And foreclosures are also on the rise, even though many of these modified loans are only beginning to enter the foreclosure process. According to the online marketplace of foreclosure properties, RealtyTrac Inc., the number of homes foreclosed in the first quarter of 2010 jumped 35 percent from a year ago. And RealtyTrac’s aggregation of foreclosure data also shows that the number of households who are facing foreclosure grew 16 percent year-over-year and 7 percent in just one quarter.So Washington enacted a program that encourages people to act unethically, rewards people who take reckless chances with their credit, penalizes people who take prudent risks, live within their means and the program doesn't even manage to be effective in any way.
But no one will remember this when the next "crisis" shows up, and they will demand that government do "something" to fix the problem. Even if government can't fix the problem.