The U.S. real estate market is in a “state of free fall” despite the U.S. government and big banks manipulating the market to stabilize it, says Mike Harris, financial editor at Veterans Today.
On Wednesday, the Washington Post said that according to a report from the special inspector general for the Troubled Asset Relief Program, American homeowners who received loan modifications under a federal government program are defaulting on their mortgages at an alarming rate.
The Home Affordable Modification Program, introduced by the Obama administration in 2009, provided $75 billion to help lenders reduce borrowers’ monthly payments to 31 percent of their income.
The Obama administration estimated that the program would help as many as 4 million homeowners avoid foreclosure. However, according to the inspector general’s report, only 862,279 homeowners are in an active permanent HAMP modification, a number that is likely to fall if the default trend continues.
“We have to remember that the U.S. real estate market has never recovered. It’s still in a state of free fall,” said Harris in a phone interview with the U.S. Desk on Wednesday.
Harris also said that the high unemployment rate in the U.S. is compounding the mortgage problem.
“It doesn’t matter how many times you should modify the loan. If they [American people] don’t have jobs, they’re still not going to be able to make their payments on this,” he added.