"Who or what is responsible for the failure of the government's mortgage modification program to make a sizable dent in the volume of foreclosures?" Many factors are involved in this complicated story, but in my view, there are two major factors. The deserving-borrower mindset From the beginning, the operating premise of the government's modification program has been that only deserving borrowers should be helped. The programs require that borrowers be suffering from financial hardship, and that their mortgage payment exceeds 31 percent of their income. Balance reductions as a modification tool are discouraged or prohibited because they constitute a permanent benefit that can't be retracted when the borrower is no longer suffering hardship. And borrowers who don't occu...
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