One In Five Homeowners Helped By Obama Mortgage Modification Scheme

Lenders, politicians and homeowners are eager to avoid a flood of new foreclosures which would drive down home prices, leading to reduced equity and more foreclosures. It's a vicious cycle.

After a slow start, Obama's mortgage modification scheme has helped one in five of eligible homeowners.

California, Florida and Arizona are taking the most advantage of the scheme which reduces monthly mortgage payments to help keep people in their homes.

What's interesting to me is how many people stay in their homes even though they have negative equity and no financial incentive not to send the keys back to the lender.

The NYT says:

Two other hard-hit states, Arizona and Nevada, had similar rates of assistance as California, at 22 percent and 18 percent. Florida was much lower, at 12 percent, possibly because of high numbers of investor-owned properties that did not qualify for the $50 billion program.

Government officials say they are pressing the industry to improve performance, but many housing advocates have been disappointed with progress.

And economists doubt the Obama administration will reach its broad goal of helping three million to four million borrowers within three years.

To make the preliminary trials permanent, borrowers must complete a big stack of paperwork and show they can make their payments on time.