A front page USA Today article criticized the Obama Administration’s Making Home Affordable plan, which created incentives for lenders to reduce the interest rate on loans to troubled borrowers rather than foreclose on them. The paper reports that 190,000 loans were modified since the program began in March, while more than one million homes began the foreclosure process. USA Today says borrowers who try to participate in the program complain of long delays and misinformation from lenders.
Others just don’t meet the terms of the plan. Among those left out of the program, Robin and Craig Doyle of Woodlands Hills, California. Their $947,000 mortgage is too large to qualify for the program, USA Today reported. The limit is $729,000 in the most expensive markets.
Now Bloomberg is reporting that Washington may change the terms somewhat. Presently a first mortgage has to be no more than 105% of the market value of the home to qualify for a modification. Now the loans being modified may be as high 125% of the home’s value and still qualify for a lower interest rate.