WH Mortgage Aid Program Still Losing Homeowners

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More people have dropped out of President Obama's mortgage aid program, with July being the second straight month of plunging enrollment.

More than 40 percent of the 1.3 million homeowners enrolled in the Obama administration's mortgage relief effort have fallen out of the program, the Treasury Department said Tuesday.

"The program really hasn't helped a lot of people, or at least not nearly as many had been hoped for," Mark Zandi, chief economist at Moody's Analytics, told The Associated Press. He predicts that about 2 million homes are likely to be sold over the next 12 to 18 months as foreclosures or short sales.

One main reason for the drop outs -- the Obama administration pressured banks to enroll borrowers without proof of income up front. Many of those same borrowers later found out they were disqualified.

Others complain of a bureaucratic nightmare.

Adminstration officials deny they pressured banks and have defended the program. Lenders are making more significant cuts to borrowers' monthly payments than before the program was launched.

Some of the largest mortgage companies in the program have also offered alternative programs to 45 percent of those who fell out of the government program.

All the drop outs may mean bad news for the economy. Analysts say it's a sign foreclosures could continue to rise and weaken the ailing housing market.

The government's program "only reflects a portion of what's happening in the broader marketplace," said Raphael Bostic, an assistant secretary at the Department of Housing and Urban Development.

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