| The US economy is in the throes of a deep recession. | | | | Many homeowners have to pay very high installments |
| Unemployment is at its peak of 10 percent. As people | | | | on the second loan. So they risk default, rather than |
| lose jobs thick and fast, even those with sound credit | | | | pay them. |
| history are faltering on mortgage payments. Hence, | | | | Last summer, the Treasury realized the problem of |
| foreclosures have become common. | | | | second mortgage and urged banks to rectify these |
| The Federal government has come up with a program | | | | loans as well. Kevin Moss, the executive vice president |
| by which loans of people are being modified, first on an | | | | of Wells Fargo says, "Our goal is to provide another |
| experimental basis, and then on a permanent basis. | | | | benefit to customers who may be in distress. The |
| However, the program started off on a slow pitch. | | | | housing market is showing some positive signs of |
| Now the Obama government is facing criticism about | | | | stabilizing in some markets, but there are still too many |
| the slow progress made on this front. The government | | | | foreclosures, and too many people who are still |
| has struck a deal with two mortgage banks that would | | | | struggling out there." |
| provide relief to house owners who have availed of | | | | A housing expert with Moody's Economy.com, says, |
| second mortgages. | | | | soon other banks will follow. However, she feels that |
| Wells Fargo & Co. has already agreed to modify loans | | | | the loan revision program will not stop foreclosures. It |
| of those who qualify under the Treasury's loan | | | | will merely postpone them. It may be noted that |
| modification program. Along with Wells Fargo, there is | | | | 308,000 properties were lost to foreclosures recently. |
| the Bank of America that came up with a similar | | | | This was six per cent more than what it was earlier. |
| announcement. It may be pointed out that both the | | | | Already, there is a lot of pressure on Obama |
| banks are responsible for 25 per cent of mortgage | | | | administration to perk up the making homes affordable |
| market. | | | | program. After all, it is supposed to slow down the |
| Experts say that while the government's intention was | | | | spate of foreclosures. The objective is to lower the |
| good when it came up with the foreclosure prevention | | | | monthly payment to 31 per cent of the homeowners' |
| agenda, yet it did nothing to address the issue of | | | | income. |
| second loans. And that is where the program is failing. | | | | |