Obama’s Loan Modification Program Under Fire

Obama’s Loan Modification Program Under Fire

In an effort to help with their mortgages and keep homeowners from foreclosure, President Obama has instituted certain government loan modification programs.  While thousands of people have benefited from the programs, there are still a multitude of problems with the government’s plans.

Class action lawsuits are currently being filed against various banks for their seeming unwillingness to work with borrowers on the verge of foreclosure.  Some borrowers swear that their banks are going as far as ignoring their phone calls or letters.  But why are the banks unwilling to work with the borrowers?  For one, banks will make more money if the borrowers are forced to foreclose then if they work with borrowers on a loan modification plan.

And so now, lawmakers are searching for ways to encourage banks to work with the borrowers.  Some plans are offering incentives to the banks.  Other plans include penalizing banks who are ‘ignoring’ their borrowers.  Though Obama’s plan is a start, it’s not the final solution, and only when the banks are forced to cooperate with the borrowers, will a solution be viable.


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