Do you know anyone who has successfully had their home loan modified? Personally, I don’t know anyone who has had success trying to get their monthly payments lowered. I’m not sure if that is due to me not knowing anyone who needs it or if they have just been turned down; people understandably don’t want to talk about their personal affairs.

From the beginning I’ve thought this was another smoke screen to keep banks going, and executives paid, while the recession impacts others. I’m naturally cautious when it comes to believing things that come out of Washington DC, especially after living in the area for three years. I would love to have been wrong about this, but according to an article I read I might be right.

Those Who Have And Those Who Haven’t

“Since its debut, the plan has led to offers of more than 190,000 mortgage modifications with lower monthly payments, according to the Treasury Department. During that time, lenders either have started or advanced foreclosure proceedings against more than 1 million homes, according to RealtyTrac. About 20% of those were foreclosed upon and repossessed. The Center for Responsible Lending says 2.4 million Americans are at risk of foreclosure in 2009, and 8.1 million could be over the next four years.

Some homeowners who applied for mortgage modifications five months ago still have no answer on whether they will be able to arrange smaller monthly payments, leaving them uncertain whether they’ll keep their homes or lose them shortly.”

The above is from an article in USA Today. I know some people may think that these homeowners brought this upon themselves, but the banks still have the money to modify the loans regardless. Why isn’t the money being used for what it was intended? Remember, $68 billion was recently returned to the government from banks. Hmm, interesting.

What Are The Banks Doing?

Even though banks have money to modify mortgage loans many seem to be doing something else with the money. Banks are asking for paperwork to process modifications over and over; seemingly “losing” the paperwork somewhere along the process. Some applications are closed, without the bank contacting the homeowner to notify them of the bank’s decision. Finally, some people are just kept in a holding pattern; some experts say delaying an answer is more politically correct than giving an immediate answer.

Who To Blame

Many people blame the homeowners for getting themselves in a bad situation by buying more house than they could afford. While I understand this way of thinking, I think the economic environment and market at the time should be taken into account. Many people, smart people, got into a mortgage loan that they previously wouldn’t have been able to afford. Others could afford the loan at the time, but the recession has changed their financial situation. Taking all of these factors into account, it isn’t necessarily accurate to make a blanket statement and say the homeowners are to blame.

Owning a house is the ultimate dream for some and when given an opportunity to buy, they jumped on it. We cannot forget the fact that many don’t know/understand all of the fine print associated with buying a home and some things got past them. Missing the fine print is something that happens to many people and it is one reason the Obama administration is making an effort to simplify the paperwork associated with buying a home.

The banks should shoulder most of the blame in my opinion for two reasons, loan practices and lack of action. First, the term “predatory loans” has become common when talking about the recent housing boom and collapse. The banking industry took advantage of eager home buyers who, for the most part, didn’t know any better. Secondly, banks have been slow to modify loans, stringing some homeowners along before denying their application. What are they doing with the money if they are refusing so many people?

The popular choice, for some, is to blame President Obama and his administration. After all, the Obama administration is being blamed for many of the problems in our country. Sure, he hasn’t made all the right decisions, but it isn’t like he had 7 years to gain experience running the country. Look, I don’t agree with everything the Obama administration is doing, but I also realize he inherited a bad situation and he has at least done something different to try to initiate change. The saying goes something like if you keep doing the same thing, you will have the same results. Obama is trying and I wish some people would just come out and honestly say they just don’t like him because of political party, race, etc. Even those who don’t like him for what he has done must admit there are many who don’t like him for other reasons.

Where We Go From Here

I think the banking industry is out of control in some ways. They had the money, didn’t necessarily to do what they were/are supposed to and gave a lot of money back. I would say they hid their actions to the largest extent possible and just returned what they couldn’t hide. Even though that opinion may be harsh and simple, these situations are often made more complex to divert attention.

Maybe later we will find out what is really going on. Or, maybe things will stay hidden in typical Washington DC fashion.