Foreclosure Frenzy Highlights Program¿s Problems

HOUSTON - It was ’going, going, gone’ for a slew of Houston-area foreclosure properties, Wednesday night.

Raising the question: what happened to the federal program that was supposed to help save people’s homes?

The idea was to let troubled mortgage-holders renegotiate with their lenders. The $75 billion program was dubbed ’Making Home Affordable.’

But not like this. There were plenty of affordable homes on the auction block in a Galleria-area hotel. Starting bids dipped under $10,000 in some cases.

Horace Gager only had eyes for one: a Channelview fixer-upper formerly worth $148,000, according to Auction.com.

’I'm expecting to get it for cheap,’ said Gager.

That’s every buyer’s motivation.

As for the sellers? At this auction they are all banks, trying to get bad mortgages off the books. Fast.

’It's one of the things we can help the banks do,’ said Walter Skrzynski with Auction.com. ’We can sell a lot of properties at one time.’

And bidding can be contagious. So Gager wasn’t taking any chances. The first-timer had a dollar figure in his head. And he vowed not to exceed it.

’I have it written down, so my mind doesn't take over and get caught up in the frenzy.’

Foreclosures, as many as four million of them, were supposed to be forestalled by the Obama administration’s mortgage modification program, unveiled in February 2009.

’The plan I'm announcing,’ said the President at the time, ’focuses on rescuing families who've played by the rules and acted responsibly.’

Almost 1.5 million homeowners still qualify.

But so far, less than 422,000 have received permanent loan modifications, 10,500 of them in Texas.

Why such a meager return?

For one thing, says mortgage expert JC Mier, rock-bottom rates have made it more profitable for banks to refinance troubled owners, instead of modifying their existing mortgages.

’With the rates being where they're at,’ said Mier, with MortgagesUSA.com, ’it makes more sense for the bank to take the easy money, so to speak, that they're going to receive from the refinance.’

No financing needed, for Horace Gager. We won his house for $57,500, cash. Soon, he said, it’ll be a rental.

’Needs a little bit of work but I do all the work myself so I think I can make a little money on it.’

And the banks can stop losing money on it.

It’s kind of a win-win. That is, if you don’t count the last owner.