SPEA Paper Says Federal Mortgage Relief Programs Ineffective

An IU professor says efforts undertaken by the Obama Administration to help struggling homeowners have failed to stem a tide of mortgage defaults.

SPEA Steps

Photo: Stan Jastrzebski

A student walks up the steps to Indiana University's School of Public and Environmental Affairs (SPEA).

A publication written by professors at IU’s School of Public and Environmental Affairs, or SPEA, claims the number of homeowners who are underwater on their mortgage — meaning they owe more than their home is worth — has not been slimmed by the administration’s Home Affordable Modification Program, whereby banks forgive some of what’s owed.  IU Assistant Professor Ashlyn Nelson helped author the brief.

“Over a nine-month period, for example, one report found that on average folks who even had received these medications were re-defaulting at rates of 60%,” she said.  “Some other folks claimed that fewer than 4% of the folks who qualified for this program were being helped by this policy.”

Nelson noted Bank of America has undertaken a program suggested as a possible fix by some economic watchers, whereby loan principal is forgiven, rather than simply nixing loan interest which has accrued as the loan has gone unpaid.

Stan Jastrzebski

WFIU/WTIU News Senior Editor Stan Jastrzebski spent time as a reporter with WGN Radio in Chicago and as an editor at Network Indiana, an Indianapolis news service. Stan is the winner of awards from the Associated Press, the RTDNA, the Indiana Broadcasters Association and the Society of Professional Journalists. He hosts WFIU's Ask the Mayor and anchors WTIU's InFocus.

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