Mortgage Modifications A Failure

There was an interesting article in The New York Times today about how even the Obama administration may have concluded that its $75 billion effort to get banks to modify distressed mortgages may not only be a failure, but may also be counterproductively delaying recovery. "Behind the scenes, Treasury officials appear to have concluded that growing numbers of delinquent borrowers simply lack enough income to afford their homes and must be eased out," the article reads in part.

The culprit remains the unwillingness of banks to cut the principal on mortgages when they're modified. "From its inception, the Obama plan has drawn criticism for failing to compel banks to write down the size of outstanding mortgage balances, which would restore equity for underwater borrowers, giving them greater incentive to make payments. A vast majority of modifications merely decrease monthly payments by lowering the interest rate." You can read the entire article by clicking HERE.