The federal mortgage modification program was targeted for criticism as a failed program as the procedural issues are hampering the foreclosure process nationwide, while foreclosures on defaulted mortgage loans declined. Thus, Congressional Republicans proclaimed that they are going to scrap the failed federal mortgage relief programs.

Failed Mortgage Modification Programs – Main Target For Spending Cuts

According to CNN, the main targets for Congressional Republicans are failing mortgage loans modification programs which throw money down the drain. There are some intentions performed by the Republicans which are aimed to cut about $38 billion from the budget by means of saving failing home loans on the cropping block. Besides, the prime target has been already defined by Neil Barofsky, the Inspector General for the Troubled Asset Relief Program – the Home Affordable Modification Program.

Mortgage Loan Modification Programs – On The Cropping Block

Refinance programs under the Emergency Homeowner Relief Fund and Federal Housing Administration, Neighborhood Stabilization Program and some other programs, which were aimed to lend emergency loans to support troubled mortgage loans, slated for demolition. Although, the mentioned programs were not successful either. Representative from chair of the House Financial Services Committee and the state Mississippi, Spencer Bacchus, reported that the programs that don’t work should be stopped. The success rate on troubled mortgage loans performed through these programs is less than 50% as there were only about 500,000 permanent home loan modifications. Besides, foreclosures take too long to process either.

Home Foreclosures Take Far Longer

According to USA Today, it takes far longer for the direct loan lenders to foreclose on a home due to the increased scrutiny of foreclosure practices and new procedural instructions for foreclosure. It’s defined that a troubled homeowner will spend 19-20 months being in the foreclosed house at current rates, besides, they can raise up to 22-23 months. A common person in a foreclosed house would basically have gone 250 days without providing a payment before the mortgage crises, comparing with the 507 days in December 2010 and 410 days in January 2010. Due to the “robo-signing” controversy the scrutiny has increased and led to foreclosures taking far longer. These facts causes mortgage loan lenders to lose substantial amounts of money.