Foreclosure Expert Condemns New Obama Program Aimed at Foreclosure Crisis

ANNAPOLIS, Md., March 11 /PRNewswire/ -- The chief foreclosure expert at USHUD.com and its parent company, Heavy Hammer Inc., warned Thursday that a new Obama administration program taking effect April 5 is rife with problems that will adversely impact real estate professionals and consumers alike, actually encouraging homeowners to walk away from mortgages.

First announced by the U.S. Treasury Department in May 2009, the plan promotes short sales as alternatives to foreclosures or loan modifications among struggling homeowners unable to participate in the Making Homes Affordable Program. Under the plan, both lenders and homeowners are provided with financial incentives to seek short sale transactions.

Michael Urbanski, CEO of Heavy Hammer Inc. and USHUD.com, says the administration's unprecedented scheme will encourage homeowners to abandon mortgage contracts, rewarding financial irresponsibility by eliminating traditional consequences. Homeowners will receive a $1,500 relocation allowance under the plan and their credit scores will remain unaffected. Additionally, lenders will rely on real estate agents to provide appraisals of distressed properties rather than employ certified appraisers, opening the door to fraud and abuse.

"The administration's approach with this program is completely wrongheaded," Urbanski said. "While some principal forgiveness for upside down homeowners may be useful, this program will encourage homeowners on the fence to give up on homeownership and turn a handful of real estate investors into real estate barons. The real estate crisis and by extension the crippled economy will be further damaged as a result."

According to Urbanski, many lending institutions are already ill-equipped to manage the current volume of short sale transaction requests received, and an anticipated influx of new requests will further overwhelm an already bogged-down system, inadvertently creating a higher number of foreclosures. Lending institutions make much greater profits from short sales and foreclosures compared to loan modifications. Banks are in the business of making money and should be motivated to do so through policies that do not create a new class of homeless people while also imploding the value of real estate.

"We are encouraged by the administration's willingness to help," Urbanski said. "However, efforts should concentrate on making existing programs more effective even if the banks make less, rather than a new plan that will harm real estate professionals and loan servicers and lead to a decline in homeownership and property values."

Headquartered in Annapolis, Heavy Hammer Inc., is an online networking and consulting company advocating for American homebuyers, connecting them with trusted experts and valuable resources. Driving one of the most widely used suites of foreclosure Web sites, Heavy Hammer delivers free, all-inclusive lists of foreclosure properties to more than 500,000 homebuyers monthly. In business since 1998, Heavy Hammer has focused on geographically-based ad serving technology and processes allowing thousands of professionals to target specific locations, connecting directly with consumers in specific locations. Starting with USHUD.com, this group of sites now includes more than 30 state- and region-specific sites.

SOURCE Heavy Hammer Inc.