Foreclosure Plan Won’t Help Those Most in Need

February 23, 2009 No Comments »

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The much criticized foreclosure prevention plan unveiled last week by the Obama administration is showing more signs of stress as few in the highest-risk areas may actually qualify for assistance.

In the Bay Area, more than 90 percent of borrowers aren’t able to take advantage of the new program, either because they hold a jumbo loan or have a loan-to-value that exceeds the 105 percent ceiling, according to the San Francisco Chronicle/Zillow.

Digging a bit deeper, only 8.4 percent of homeowners in the San Francisco metro region meet the program’s criteria, and it’s even lower (6.9 percent) in the San Jose region.

In Vallejo, CA, one the harder-hit Bay Area cities, the percentage who qualify is a meager 17.6 percent, much of which the SF Chronicle attributes to a greater number of conforming loan amounts.

However, the number is still below the national average, as one-quarter of all U.S. home mortgages supposedly meet the two basic qualification requirements in terms of loan size and LTV.

The same problem is rearing its ugly head in South Florida, another foreclosure hot spot.

In Palm Beach, Broward and Miami-Dade counties, only 18 percent of mortgage holders have LTVs between 80 and 105 percent; 35 percent have LTV ratios greater than 105 percent and would not qualify.

Sure, individual banks and mortgage lenders can still take it into their own hands to offer principal reductions to those who fall outside the program’s parameters, but it seems those most in need may not actually receive any help.

Though, one could argue that many of these borrowers are too far gone to benefit from the program anyways.

(photo: mcrgraffhed)

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