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Loan Modification Program Sucks, Critics Line Up to Fix It

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Loan modifications are "turning out to be something of a disaster," says an Oakland housing advocate. She's not alone in her assessment, if the AP report published two days ago is any indication — 40 percent of people who got reductions on their monthly payments just ended up falling behind again within a year. And just over 30,000 got loan mods, compared to the 1.7 million homes that are headed toward foreclosure next year. That bears repeating: 1.7 million! There are suggestions to steer the loan mod program back on course, however. Among them: 1) something to address unemployment among borrowers, i.e. lowering payments until owners find employment again, 2) renting foreclosed homes back to (former) homeowners, 3) debt reductions for homes that drop in price by a certain amount, and the harsh timeout of 4) "do nothing," since all these "grown-ups" got themselves into this mess themselves in the first place.
· 2009's mortgage modifications pretty minor [SFGate]