CHESSNOID

The idea is good which is to stop foreclosures.  What is the plan?  That is where the problem comes in.  To simply say this is what banks and mortgage companies will do if a borrower defaults is not a plan.  Who will pay for this bailout?

Chicago Sun Times:

Unemployed homeowners facing foreclosure would have their mortgage payments temporarily cut as part of changes being made to the Obama administration’s foreclosure-prevention program.

Troubled homeowners who owe more than their homes are worth also would get additional help.

The administration announced Friday that people receiving unemployment benefits would see their mortgage payments drop to no more than 31 percent of their monthly income for three to six months. Once they do, they may qualify for a loan modification that would permanently reduce their payments. To qualify, homeowners must request the temporary help in the first 90 days of mortgage delinquency.

“I think this is a benefit if it works,” said Michael van Zalingen, director of homeownership services at Neighborhood Housing Services in Chicago. “Over half of our clients are having trouble paying their mortgage because of income reduction. It’s a benefit for someone who would not qualify for HAMP because they are unemployed. This bridges that gap.”

But he has concerns.

“There are a lot of people who are unemployed for a year, year and a half,” he said. “This may not be enough time for a lot of families.”

For borrowers who owe more than their homes are worth, their mortgage companies can cut the total amount they owe, or they can refinance into loans backed by the Federal Housing Administration. FHA will get $14 billion in incentive money from the federal bailout fund.

The other government program HAMP has helped a few people out, but is a failure compared the amount spent to the amount of people actually helped.

Many economists and analysts claim that the economy is better or has already rebounded. If that is true, then why is mortgage delinquency increasing.

Benzinga:

The Treasury Department reported less-than-optimistic news for the housing market. For the seventh consecutive quarter, the number of current and performing mortgages have fallen. Now at 86.4%, the decline was likely led by the 21.1% increase in the mortgages 90+ days past due (which now is 4.7% of all mortgages out there).

The report includes 34 million loans valued at nearly $6 trillion, and covers their performance through the end of Q4 2009.

This data suggests the housing outlook for 2010 may be bleak. Late mortgage payments lead to foreclosures, which will further perpetuate the limping U.S. housing market. It appears the only thing to stop the decline will be some form of outside intervention like government loan modification programs.