Money Pit

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As President Obama sets out on yet another vacation, news arrived of yet another of his triumphs. On August 20, reported that Obama’s $75 billion program to stop foreclosures is not working very well. About half of the 1.3 million homeowners once enrolled in the mortgage-relief program had dropped out. Only a third had actually received mortgage modifications and were now paying their mortgages on time. Many applicants were complaining that it is a bureaucratic nightmare to try to take advantage of the program.

Meanwhile, foreclosures are increasing. The country looks likely to have a million homes lost to foreclosure this year, up from the 900,000 last year. (By way of comparison: foreclosures were averaging about 100,000 per year before the mortgage meltdown.) Predictions are that the number of foreclosures and short-sales will hit 1.5 million next year.

It appears that by the time this massive program peters out, only about 500,000 people will have been helped. Just as massive stimulus programs have failed to stimulate the economy, the mortgage modification boondoggle has failed to result in the desired modifications.

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