Government to unveil plan to shrink some home loans - WAOW - Newsline 9, Wausau News, Weather, Sports

Government to unveil plan to shrink some home loans

WASHINGTON (ABC)-- Homeowners who are behind on their mortgages can expect to get some new help from the government.  Friday the administration is announcing major changes in its mortgage modification program; one to help those out of work and one to help those who are "underwater."

A year ago, the Obama administration said it had a program that would help three to four million homeowners avoid foreclosure.  Yet to date, just 168,000 have had their mortgages permanently modified.  

A harsh new government report also claims it isn't working.  The report calls the administration's promise of help homeowners "essentially meaningless." 

Neil Barofsky, TARP Special Inspector General says, "I don't think this program can be viewed a success unless it helps meaningful number of people permanently modify their mortgages so they can stay in their homes."

To make matters worse, sales of existing homes dropped last month for the third month in a row.

Representative Edolphus Towns, Democrat from New York and House Oversight Committee Chairman says, "Families are being destroyed because of the fact that mortgages are not being paid.  They just need a little support and need a little help."

So Friday morning on Capitol Hill, the Treasury Department will announce improvements to the Obama administration's program.

Among the changes, new protections for homeowners.  Lenders will not be allowed to start the foreclosure process until they can prove that the homeowner is ineligible for the program and homeowners applying to have the mortgages modified must now get a decision from the government within 30 days.

As part of the coming changes, lenders will now be required to reduce or even eliminate mortgage payments for many unemployed homeowners.

Online Reporter: Jill Courtney

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