It's seems a day does not go by without a story about the government or a lending institution providing assistance to homeowners who have failed to pay their mortgages.
I have heard several stories about individuals who have not paid their mortgage in many months, and they haven't even received as much as a stern telephone call from their lender, let alone a foreclosure notice.
Lenders are modifying the terms of loans for hundreds of thousands of struggling borrowers, reducing payments by lowering interest rates and extending the term of the loan.
On November 20, 2008, Freddie Mac announced that it would halt foreclosures.
On November 11, 2008, Citgroup placed a moratorium on foreclosures and announced a plan to help 500,000 "at-risk" homeowners.
On November 3, 2008, JPMorgan Chase & Co. decided it would stop putting loans in foreclosure for 90 days and Bank of America planned to modify an estimated 400,000 loans it acquired when it purchased Countrywide Financial Corp.
The Bush Administration announced a plan on November 11, 2008 for refinancing delinquent loans held by Fannie Mae and Freddie Mac. The plan's goal is to reduce the monthly payment on the loan to no more than 38 percent of a family's monthly income. This could be accomplished by lengthening the term of the loan, lowering the interest rate, or reducing the loan principal.
In September, the government's Hope Now program, an alliance of mortgage servicers, counselors and investors, claimed to have helped two million at-risk homeowners avoid foreclosure.
On May 1, 2008, a Massachusetts law extended the foreclosure notification period to 90 days.
But wait, the Internal Revenue Service (IRS) now has joined the fun. The IRS announced a plan December 16, 2008 that would let homeowners off the hook for back taxes.
Under the plan, financially stressed homeowners could request that a federal tax lien be made secondary to liens by the lending institution that is refinancing or restructuring a loan. This sounds like a pretty good deal for the banks too.
According to the USAToday article, taxpayers would also be able to ask the IRS to discharge, or remove, its claim to a property in certain circumstances where the property is being sold for less than the amount of the mortgage lien.
I don't want to sound unsympathetic, and I do understand some people are really facing a bad situation that may not entirely be their fault, but there does not seem to be a lot of incentive for people struggling to pay their mortgage to keep struggling to make those monthly payments.
And when they decide to call it quits, it's our tax dollars coming to the rescue.
I sure hope the federal government knows what it is doing.