Obama also launched, then broadened, a separate program aimed at helping people refinance their mortgages even if they had little home equity or owed more than their homes were worth. In all, the administration says, 900,000 people have refinanced under the program, saving an average of $2,500 a year.
The Federal Housing Administration has a range of programs to help distressed borrowers, and the administration has worked with private counseling agencies who negotiate with lenders to encourage loan modifications.
In addition, the $25 billion deal struck between 49 state attorneys general and the nation’s five largest mortgage servicers should result in direct relief for distressed homeowners, the administration says.
Still, the bitter reality for many Nevadans is that the government help is not sufficient to fix home purchases that have been transformed into ruinous investments by the downturn.
At a twice-monthly foreclosure-prevention class run by the Legal Aid Center of Southern Nevada, distressed homeowner after distressed homeowner is looking for a way out of a financial mess that seems to only grow worse.
One man, an Air Force veteran and former military contractor, quit his job after landing a lucrative overseas contract, only to have the deal fall apart at the last minute. Now he drives a cab for a fraction of his previous pay, and he has fallen behind on the payments for his four-bedroom home.
A couple stationed at nearby Nellis Air Force Base said they had not made a mortgage payment in more than three years. They bought their home five years ago for $355,000, and now it is worth less than half that.
Being in the Air Force, the couple — who spoke on the condition of anonymity for fear of losing their security clearances because of their financial problems — can be ordered to move at any time. With a turnaround in housing values nowhere in sight, they decided their money would be better spent helping other family members.
Their only hope for saving their home is through a substantial principal reduction, but the lawyer who led the class made it clear that such large-scale reductions are rare. Short of that, she said, having a bank repossess a home may not always be the worst thing.
“In some cases, maybe it is not a bad idea for a home to be foreclosed,” Venicia Considine said.
The Watts thought they had shrewdly avoided the madness stirred up by the housing bubble when they bought their home in 2009. They painstakingly compared prices before picking up their home for $145,000 in a short sale. They thought they had bought at the bottom of the market. Little did they know how far it would fall.