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‘Home Affordable’ loan mods offer hope

Part 3: Will Obama's mortgage plan work?

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Editor's note: This is Part 3 of a three-part series. Read Part 1 and Part 2. My previous articles in this series criticized the Obama administration's new "Making Home Affordable" (MHA) program because it ignored negative equity -- which is the major factor underlying the currently horrendous foreclosure rate -- and because it offered refinance relief only to borrowers lucky enough to have their mortgages owned or guaranteed by Fannie Mae or Freddie Mac. This article is about the loan contract modification part of the program, which covers loans owned by any investor. Like the refinance program, the loan modification part of MHA ignores negative equity and offers help only to owner-occupants. Investors are not eligible. Those negatives aside, the modification program is well designed. Its architects have taken note of a number of problems that have bedeviled existing modification programs, and have fashioned sensible remedies to deal with them. Shortages of Tra...