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Housing

Another Blow To Housing: US Mortgage Plan Fails

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By Douglas A. McIntyre Updated Published
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The US government plans to put as much as $75 billion into programs to keep people in their homes and stanch the flow of mortgage delinquencies and foreclosures. The intention behind the plans is to build a safety net under home price by reducing the odds that people will default on their home loans and abandon their residences.

The program has been an extraordinary failure and housing prices will suffer because of that.

The federal government reported that only 66,000 people have had their mortgage payments permanently reduced since the programs began. There were 853,969 homeowners in the program at the end of last year, but most have obviously not qualified to move from a trial status into the permanent group.

The process has been undermined by paperwork which is complex, banks which have little reason to coöperate with the program, and the plans lower monthly payments but not the total amount of each mortgage. This means many homeowners have underwater mortgages and would have to pay their lenders a portions of their home loans if they sell their houses.

Until the federal programs resets loan principles and allow banks to do so without taking damaging write-offs, the plans are doomed.

Douglas A. McIntyre

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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