This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The 5 Dumbest Things on Wall Street: Aug. 20

5. The Federal Mortgage Program -- Almost as Successful as the Titanic!

Homeowners drowning under the weight of high mortgage rates and a plunging economy are finding that their rescuer has arrived in a leaky boat without a life ring -- or even a pair of arm floaties. And the lifeline the government did manage to throw out was, apparently, too knotted and twisted for homeowners to untangle.

Indeed, the Obama administration's $275 billion "Making Home Affordable" program was billed as having the potential to reach up to 9 million troubled homeowners, according to initial estimates. Instead -- according to a weeklong series in The Street this week -- paperwork delays, confusion over eligibility requirements and the hesitance of banks to participate has left millions out in the cold.

President Obama unveiled the "Making Home Affordable" program in February 2009 as a solution to a mortgage crisis that had clearly spiraled out of control. The most recent report on the program, from June, found it to be falling far short of its stated goals.

According to the report, just 24% of borrowers eligible for a federal mortgage-modification program have received permanent mortgage modifications. And while 1.6 million homeowners were eligible as of the last report, more than half a million had abandoned the program, seeking other solutions or falling victim to the housing market's collapse. Others have been excluded because properties are vacant, or because owners earn too much money, don't owe enough money or haven't seen home values plunge far enough.

Adding injury to insult, since the program's inception, nearly 6 million homes have received foreclosure filings, according to RealtyTrac -- despite a foreclosure-moratorium that predated the program and lasted through March.

Fewer than 390,000 homeowners are now in permanent mortgage modifications through the Home Affordable Modification Program. Meanwhile, nearly 530,000 participants have canceled mortgage modifications.

Let's put it all another way: Roughly 24% of all borrowers eligible for the mortgage modification have received mortgage modification; by comparison, in 1912, almost 32% of the passengers aboard the Titanic when it struck an iceberg in were saved. There must be a metaphor in there somewhere -- something involving "underwater mortgages" and "sinking ships" and "perfect storms," perhaps?

1 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $130.28 -1.14%
AMZN $429.23 0.62%
BP $41.46 -0.22%
BAC $16.50 -1.02%
BBY $34.70 1.52%

Markets

DOW 18,010.68 -115.44 -0.64%
S&P 500 2,107.39 -13.40 -0.63%
NASDAQ 5,070.0260 -27.95 -0.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs