Home Underwater? Walk Away From the ‘Homeowner Relief’ Plan

Famly law, appeals, elder abuse, civil litigation

If our politicians won’t go to bat for you, you can always just walk away.
One in every 95 Nevada housing units received a foreclosure filing during the month — more than four times the national average.

Nevada started 2010 leading the nation in the rate of foreclosure cases again, but lenders scaled back on the amount of filings from a year ago. California-based RealtyTrac reported Nevada had 11,854 foreclosure filings in January and 2,332 homes had been repossessed. The filings fell 18 percent from January 2009 and were equivalent to the rate in December. Nevada bucked the national trend in January because foreclosure filings rose 15 percent over January 2009 across the country states an article in the Las Vegas Sun here.

The homeowner relief plan adopted by President Obama and Treasury Secretary Timothy Geithner has not been working for a full year now. Nevada started 2010 leading the nation in the rate of foreclosure cases again, but lenders scaled back on the amount of filings from a year ago.

“The rational thing for these people to do is to send the keys to the bank and say, ‘Good luck,'” says Dean Baker, co-director of the Center for Economic Policy and Research. “Every month that you keep that person in their home paying that mortgage, that’s a gift to the bank. So if you could keep a lot of people from sending their keys to the bank, and keep sending their checks instead, that helps the banks directly.”

But the primary problem is not that the administration’s program isn’t reaching enough borrowers—it’s that the “relief” offered by the plan is actually worse for a lot of borrowers than outright foreclosure. And despite heavy criticism from community groups and borrower advocates, Geithner’s Treasury Department—which oversees the plan—has refused to alter HAMP’s core objectives, opting instead for a series of minor paperwork processing tweaks.

“You can’t make a significant dent in mortgage defaults without reducing principal,” says Raj Date, a former Capital One executive We have not, in fact, fully revived the U.S. financial system. We’ve just helped banks book profits on the backs of troubled borrowers. With HAMP, we’ve even encouraged borrowers to waste their money on irrational payments.

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