Thaindian News

Washington DC, July 21 (THAINDIAN NEWS) United States officials say more than 40 percent or 530,000 of Americans who signed up for President Barack Obama’s mortgage aid have backed out.

The program was aimed to rescue homeowners who were facing imminent foreclosures. As a result of the dropping off, a new report suggests that the number of foreclosures could rise in the second part of the year and this will negatively affect the United States housing market.

It ought to be mentioned that about 1.3 million American homeowners had signed up to President Barack Obama’s program, which started on March 2009.

Since the start of the program in March 2009, 30% or 390,000 borrowers have achieved permanent loan modifications and according to the Treasury Department, they are making their payments on time.

Initially, President Barack Obama convinced the banks to grant the loans to the borrowers with demanding proof of income. But after sometime, the bank made proof of income a requirement for borrowers. This discouraged many people and soon the banks were also disqualifying so many people thus making the dropout number so high.

But the banks insist that it is the borrowers who are not providing the necessary official documents. The United States government gave mortgage companies tax breaks to give borrowers low payment loans.