From where we stand at the beginning of a fresh year of economic recovery, the counteracting of the waves of home foreclosures seems to be a quickly fading dream. Many experts and home owners have been critical of the government's current program, saying that it doesn't do enough to help with the reduced amount of equity that home owners have in their homes.
In theory, the government's mortgage modification program is supposed to help home owners in trouble modify their mortgages so that their payments were reduced and they could pay them off over a longer period of time. In reality, the majority of home owners in financial distress have not been able to qualify for mortgage modification due to a combination of reasons including their lenders taking a long time to learn the new program and the difficulties in qualifying.
There are many criticisms about this program because it just ties the home owner into paying off the same large chunk that they already had, just over a longer period of time while their home is actually worth less. Some critics of the current government program are making a call to policy makers to initiate a program that actually helps home owners by reducing the principal on their loans so that they are no longer underwater, with home owners owing more than their home is worth. Critics say that this would be a more fair approach to helping homeowners build more equity in their homes and be less likely to walk away from their mortgages.
However, even this plan has its detractors; one of the biggest concerns is that principal reduction would be very hard to apply in a fair way. So many of the programs that have been conceptualized or put into place are exceedingly hard to apply fairly because situations are so different across the country. Some home owners can make ends meet by working extra hours or picking up a part-time job to supplement their income and feel that programs that are modifying other home owners' mortgages or reducing their principal is rewarding those home owner's poor decisions.
While it is evident that the current program that the government has in place is not working to help out the majority of home owners, it's uncertain at this point if there is a potential program that can fairly spread the assistance to those who need it without making those home owners who're struggling their way through the recession feel like they're being penalized by being responsible for their own debts.
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