The Treasury Department just released disturbing reports that about 90,000 “distressed borrowers” will be losing their federal mortgage aid under the government’s foreclosure prevention plans possible making this another administration failure.
But the news may prove to be much more damaging. This announcement includes the thousands of homeowners who have already modified their loans to lower payments and have paid them on time.
While some of these consumers are losing their benefits due to a failure to prove that they were qualified for this help in the first place, many other participants are losing their current loan modifications due to earning too much or too little since they started the process.
Although federal programs must have certain limitations to avoid fraud, what makes this program flawed according to many experts that it actually penalizes those who are saving some of their income for retirement. These savings put them over the limit and thus they no longer qualify.
There are many who are loudly calling for the government to stay out of matters that constitutionally they have no right to enter. But to disqualify those who first qualified for funding doesn’t seem fair as well.
The problem lies not in the fact that these distressed homeowners were rightly approved for foreclosure prevention benefits after submitting all necessary paperwork, but the grim reality that they no longer have any rights to this emergency funding due to government loopholes.
It is shameful to see homeowners who didn’t commit any fraud should have to lose their homes due to situations beyond their control. And yet, the government keeps billions flowing to the very companies that have defrauded the American people and obviously do not deserve such bailouts.
But what may be a bit of good news for these displaced modified homeowners is that there are now private companies who can help them avoid foreclosure.
Wells-Fargo is one such private company and bank who is offering help to distressed borrowers in lieu of federally mandated options. And there is no surprise to the large number of mortgage owners leaving the fickle government programs for these private ones.
Why? It seems once you’re in there, you actually have a shot at getting a direct answer on whether or not you’re able to keep your home and what your payments will be. This may be what homeowners need and will use.
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