Underwater Homeowners Should Have Received More Help Sooner
The complaint that the federal government hasn’t done enough to curb foreclosures has been a common refrain here in Florida and across the country.
But now, our Miami foreclosure lawyers understand that the fact that President Barack Obama’s administration didn’t take drastic action to force banks and mortgage servicers to work with homeowners at the start of this crisis is weighing on his chances for re-election.
To be fair, he undoubtedly inherited the worst economic downturn in our nation’s history since the Great Depression. He was committed to pouring a great deal of money into a number of efforts to put the financial system back on solid footing.
However, simply pouring money at a matter was never going to solve anything when the banks were refusing to work with underwater homeowners. A recent New York Times article points out that Obama had rejected a number of proposals to bailout individuals who were in danger of losing their homes. Instead, he enacted a program that was essentially a limited aid program. The hope was that once the economy began to rebound, the issue would take care of itself.
Mr. Obama also touted the benefits of helping only responsible homeowners – those who were trying to stay current on their mortgage. But when even those homeowners applied for loan modifications, the banks often wouldn’t help them because they hadn’t fallen behind.
The problem was that the administration didn’t simultaneously push for legislation that would force mortgage companies to help borrowers. Additionally, any financial incentives it did offer weren’t enough to prompt the companies to do much of anything. It must be said that mortgage companies are inherently designed to do one of two things: either collect payment, or foreclose. Barring any legislation that would provide sanctions if they did not try to help homeowners, there was no motivation for them to do anything but the status quo.
As a result, the administration has essentially failed in its efforts to make much of a dent at all in the housing crisis. Back in 2008, at a speech in Arizona, Obama said that the government was prepared to help facilitate the loan modifications of around 3 million to 4 million homeowners. However, while nearly 4.5 million have applied for help, only about a million were granted the government-sponsored modifications. Nearly a third ended up being turned away and either lost their homes or had to file for bankruptcy.
It wasn’t until last summer that Obama and his team began to enact more aggressive measures to help homeowners. Now, there are a greater number of options for people facing foreclosure, and with the recent $25 billion bank settlement agreement, there are more incentives for banks to work with struggling homeowners. But it begs the question: How many more homes could have been saved if the administration had pushed to enact these measures sooner?
Even as some within the administration lament that more wasn’t done sooner, some say they did what they thought was best under the circumstances.
Obviously, it wasn’t enough.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call 305-358-7991.