With all of the different bailout programs and rescue plans, it’s hard to keep it all straight – TARP, HLPR, TALF, H4H…. programs totalling trillions of dollars, with the intent of helping keep businesses and people afloat during this difficult economic time.  So have you wondered if any of these programs are actually working? If our hard earned tax dollars are being put to good use?

Remember last July when the “Hope for Homeowners” program was unveiled? It sounded so good – so hopeful.  The plan was designed to help people who found themselves “upside down” in their mortgages due to falling home values; people who were at risk of default and foreclosure.  The plan was that the government would modify the current mortgage, insure it through the FHA (Federal Housing Authority) and in turn, if and when the home was sold, the government would get half of the profit.

According to HUD (Housing of Urban Development), there were a total of 865 homeowners who applied to be a part of this program. Out of that number, 51 mortgages were modified (but not by using the Hope for Homeowners program) and 1 mortgage was completed. One.  Just one.  One very lonely mortgage.

The astonishing part of this is the other numbers in the story -
$300 Billion has been set aside for FHA to use for this program
An additional $20 Billion credit subsidy was made available to help fund the plan
400,000 was the  number of mortgages the plan was estimated to benefit
865 applications were received out of 66,000 phone inquiries (since last September)

We can only hope that the one homeowner who modified their mortgage with the H4H program got a really, really good deal.

In contrast, Hope Now, a private sector group is the alliance of mortgage market participants, mortgage servicers, and counselors that is working to help as many homeowners as possible avoid foreclosure and stay in their homes. They help facilitate either a repayment plan that allows the borrower to become current and catch up on missed payments that are appropriate to the borrower’s circumstances, or a modification which occurs any time the term of the original loan contract is permanently altered.  This can involve a reduction in the interest rate, or forgiveness of a portion of principal or extension of the maturity date of the loan.  This program has been in effect since July 2007 and has to date helped 3,675,971 homeowners stay in their homes. What has this program cost taxpayers?  Zero. That’s right – zero.  Amazing what can be accomplished by organizations and businesses when the government stays out of the way.

In it’s defense, the government’s latest program – Making Home Affordable program, which was available as of April 6th, does seem to be on the right path. It allows homeowners to refinance their first mortgages, up to 105% of the current value of their home, without having to pay mortgage insurance.  So far, I’m finding it very easy to get people approved – quite often with no appraisals required, and only a pay stub and verification of employment needed for income documentation. The rates are quite good, especially if you have a 720 credit score and are only refinancing up to 95% of the value of your home. The government has committed another $75 billion dollars for this program which is designed to help seven 7-9 million homeowners.

We’ll have to wait and see if it fares better than their first attempt. I’ve been able to help a few people already with this program, so I know for sure, that only one week into it, they’re already ahead of the previous score of one.