Loan Modifications Not Happening Fast Enough

by chadfish on July 11, 2009

The White House just came out with an announcement that they are displeased with the snail’s pace in which the loan modifications are rolling out. This news came out at the end of June and it’s not too surprising given all the negative press on the economy over the last few weeks. Obama is getting the picture that many of his big reform bills are not cutting it when it comes to fixing what’s broke in the economy and it’s time to start putting some teeth into the policies enacted.

Obama’s Foreclosure Prevention Program was seeded with $75 billion dollars, but so far not a lot has been done with it as mortgage companies and loan servicers drag their feet and do everything they can to avoid giving a mortgage modification.

It’s not that people aren’t trying to get a loan modification. Many of these banks and loan servicers are inundated with calls and inquiries about how to get a loan modification done, but there’s not a lot of assistance being provided to the homeowners. Hopefully as the economic picture worsens and job losses invarialy accelerate, Obama and team will get the picture and start enacting tougher laws to force some of these banks to come to the table.

Right now the world is awash in debt and much of it is bad debt and mispriced. Corporations need to start converting this bad debt to equity and until they start doing that the US and much of the global economy will stagnate and companies continue to hope that the good times will come back right away. The good times will come back, but it will take time and it won’t happen in the next 6 months. The sooner we start moving on from the bad loans and the bad debt the sooner we “start over” and wash out the liabilities that are hurting everyone everywhere.

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