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The Obama administration Friday announced a stepped-up effort to prevent foreclosures.
Earlier federal efforts have helped only 170,000 homeowners modify their mortgages, out of 1.1 million who started the process over the past year. This initiative focuses on unemployed homeowners because, while the foreclosure crisis started with risky subprime loans to less qualified buyers, it now mostly involves homeowners who got loans they could afford — but cannot pay because they have lost their jobs.
The administration estimates 3 million to 4 million households, but Mark Zandi of Moody's Economy.com gave The Associated Press an estimate of 1 million to 1.5 million homeowners.
$14 billion
Private lenders and the federal government, through the Troubled Asset Relief Program (TARP).
"So many people are unable to afford their mortgage payments due to a loss of income. To add a tool that can help us deal with the issue of unemployment is really a good thing." — Phyllis Salowe-Kaye, New Jersey Citizen Action
"As the industry worked its way through the problem of subprime borrowers who could no longer afford the mortgage they had taken, it became apparent that the emerging challenges lay with borrowers who had lost their jobs or seen a significant drop in household income. ... Expanding refinance opportunities and ... encouraging the reduction of mortgage principal gives servicers yet more tools to help underwater borrowers." — John A. Courson, president and CEO of the Mortgage Bankers Association
"We are greatly disappointed and disheartened that the Obama administration is offering little hope to unemployed homeowners facing foreclosure, who are by far the largest group of homeowners facing this." — Lucy Kolin of the PICO National Network, a coalition of faith-based community groups, in comments to Bloomberg News
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