Foreclosures Far Outpacing Mortgage Modifications

While the Obama Administration's foreclosure prevention efforts have been mildly successful at helping hundreds of thousands of homeowners to modify their loans, this is just a fraction of the 1.8 million foreclosures in the first half of 2009 alone. Dan Rafter, from Mortgage-Roadmap, discusses why jobs are the key to stemming the tidal wave of foreclosures in the US.

Pres. Barack Obama's foreclosure-prevention program has seen some successes: Mortgage companies have offered to modify more than 406,000 existing mortgage loans, hopefully to keep homeowners from losing their residences to foreclosure. The program seems to be on track to offer loan modifications to 3 million to 4 million homeowners in the next few years.

But there's one problem with all this: The rate of housing foreclosures is far surpassing the number of loan modifications, according to a story in BusinessWeek.

The BusinessWeek story cites data showing that there have already been 1.8 million housing foreclosures in the first half of this year. That makes that 406,000-plus loan-modification figure look a bit paltry. The story also says that the country will see anywhere from 3 million to 4 million new housing foreclosures during the next two years.

It's going to take an awful lot of mortgage-loan modifications to stem this tide. Of course, the real way to stop this wave of housing foreclosures is to get people working again. With the national unemployment rate nearing 10 percent, there are just too many people out of work these days.

When you don't have a job, it's awfully hard to make those mortgage payments. That's the big issue right now. And until this changes, all the government foreclosure-prevention programs won't really make a big dent in the record number of foreclosures now hitting the country.

This post has been republished from Mortgage Roadmap, a mortgage news and analysis site.