The Obama Administration's widely touted but proven unsuccessful foreclosure rescue plan has been a complete unmitigated disaster.
1,000,000 applicants have applied for relief
Only 31,000 new loans written.
Less than 3% of homeowners in foreclosure actually qualify for the program.
So now, to snatch shameful victory from the jaws of defeat, the Administration has decided to pressure lenders to rewrite lots and lots of mortgage loans instead of actually taking steps that might raise real estate values and boost the economy.
On Christmas Eve 2009 the U.S. Treasury announced new regulations where borrowers who LIE on their applications and understate their income to qualify for mortgage relief still are eligible for the program.
These rules come right after yet another revision on November 30, 2009.
These new HAFA rules announced while most people were still digesting Thanksgiving dinner give lenders only TEN DAYS to approve or deny a short sale application.
The current time is between THREE TO SIX MONTHS.
Did anyone at Treasury ask WHY IT TAKES SO LONG for applications to be processed and approved before enacting yet another rule that attempts to stiff lenders and investors in mortgage paper?
The National Association of Realtors says that short sales now represent 10% of all real estate transactions. Lenders are FLOODED with applications, many of them fraudulent. This area has become the latest real estate get-rich-quick scheme with good reason.
And now, lenders only have TEN DAYS to decide how much equity in their paper to surrender or face Federal penalties. And even during those ten days if they discover that applicants are lying on their applications they still must be approved for relief!
As one of my mortgage lender friends said this morning when I discussed these new Treasury rules with her, and I quote:
These new rules don't go into effect until April 2010 and are designed to expire December 2011.
Yeah, sure. Just like rent control was designed to expire at the end of World War II. By the way, how is the war going these days? Are the Japanese still losing in the Pacific?
Robert J. Abalos, Esq.