Obama says it’s time to say Good-by and Move on

The foreclosure crisis has been a challenge for this president, who has invested more than $787bn in Wall Street in hopes they would help keep Americans in their homes, now this administration has thrown in the towel, the new direction, help the banks to liquidate American homeowners. Obama’s new approach paying homeowners to leave quietly.

Taking effect on April 5, the new program hopes to encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program, (which simply hasn’t worked), to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.

However, this program like all the others is dependent on co-operation from the Banks and servicers of the loans, who so far have refused to participate in these types of government programs unless there is money in it for them. Short sales have been unsuccessfully tried for the past two years and very few have actually been accepted by the banks without the borrower agreeing to repay the short part of the mortgage, this plan is not expected to fare any better.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in "relocation assistance."

However the servicer earns much more than $1000, by maintaining the borrower in a default status, and through the foreclosure.

This program is more like a slap in the face of the defaulting borrower! $1,500.00 won’t pay even a portion of the moving costs.