You May Need To Document Your Finances

President Barack Obama's administration likes to use bureaucratic rules and paperwork to determine much of the economy rather than the free-wheeling free market system.

One example of this is the new requirement to document your finances to modify your mortgage under Obama's new program.

The LA Times says:

Taking borrowers at their word for how much they earn was a major cause of the mortgage meltdown. That practice may also be why an Obama administration program has struggled to convert temporary loan modifications into permanent ones.

The government said Thursday that it would overhaul the program by requiring homeowners to document their incomes before trial modifications are granted. Borrowers previously could have their interest rates lowered and the terms of their loans extended on a trial basis without providing pay stubs or other financial documents.

Banks and other mortgage service providers were supposed to collect those documents during a three-month trial period, with the modification becoming permanent if the borrower made three reduced monthly payments and submitted the required paperwork. But the program yielded few permanent modifications.