It sure is hard to get a handle on Making Home Affordable (MFA). Media coverage is scant and until recently, program information was hard to find and opaque when found. (But while still opaque, it at least exists now: see the Quick Links at the FinancialStability.gov MHA page.)
Our "Civic media" job at this diary is to assess MFA as fairly as we can and then to see if we can get media and government to respond and make needed changes. To this end, we've been asking if MHA is making a positive difference in your life or those of the 4-9 million at-risk homeowners MHA is supposed to benefit.
Hate to say it, but your 50 comments so far (from 20 commenters)in Parts I-III of this diary were not positive.
So today, in Part IV, we're giving a fairly negative assessment of MHA's effectiveness to date. You can validate or invalidate this assessment in today's poll. The more people who respond, the more weight this diary will carry if and when we start linking up with real estate reporters and government officials.
First, a resource. Has anyone called the Fannie Mae Hotline at 1-800-7fannie to report a disagreement with a lender? Any success? Now let's get down to it with two tough quotes. The first:
The hard truth is that in the United States, an average of 10,000 homeowners have been losing their home to foreclosures every day. An estimated 10-to-12 million households in the US will not be able to pay their mortgages over the next four years Read more
And the second: a July 16 Associated Press Story:
WASHINGTON – Relentlessly rising unemployment is triggering more home foreclosures, threatening the Obama administration's efforts to end the housing crisis and diminishing hopes the economy will rebound with vigor. rest of story
While these quotes are no fun to read, they do show what Making Home Affordable (MHA) is up against: a mortgage crisis so big, conceivably, that neither MHA nor the federal government handle it.
Hope I'm wrong. But I look in vain to see if anyone at the White House or Treasury is even keeping count of the foreclosures avoided to date thanks to MHA. (All I find is piecemeal reports from participating lenders showing statistically insignificant results.) Anyone out there got the real numbers?
OK, so let's ask some smaller questions about things like, what's the level of service that participating MHA lenders are providing to MFA applicants? How well MHA is being administered by the government and the participating lenders? To date, of the 20 or so folks who commented here, only several have been satisfied with MHA. The rest have ranged from deeply confused to flat out angry to knowingly cynical. Unfortunately, some of the best informed - Theran (Pt II) and Tailor324 (Pt II) - have fallen into this last category. But let's start with a thoughtful if negative comment from Patricia (Part III):
I called my lender last month to talk about a loan modification. They had absolutely NO idea of what they were talking about, in fact I knew more about the program than they did. I was given incorrect information and sent on a wild goose chase through their phone system. I told them more than once that they were giving out incorrect information. I am going to try again but I don't believe that it is just incompetence on their part it all seemed too clever by half.
Here's one more quote to tap the depth of negativity towards MHA. "The name [Making Home Affordable] seems a little Orwellian," commenter Theran says,
However, the reasoning behind the original program was based on data and theory. Essentially, there were two Boston Fed research papers that studied the MA [Massachusetts] collapse in the 80s and the early part of the 2007 collapse, and they had a few important conclusions, which were:
(1) Ruthless default in the sense isn't a big deal the way people on blogs make it out. Negative equity is a precondition for foreclosure, but doesn't cause it, at least in the data.
(2) Income shocks are more important than payment shocks, all things being equal. (In other words, mods won't work for people who lost their income stream.)
Together (1) and (2) basically say: the GSEs will reduce their default rates by giving payment security to people with jobs and a little negative equity at worst. (But others are hosed.)
The recent action is essentially a bigger bet on (1), which starts to get away from the kinds of data they had, if I remember the paper.
This comment fuels the idea that whatever the Obama administration originated wanted MHA to accomplish, the program is ending up as a "sop to the banks," as one commenter put it. It also fuels the insidious idea, voiced by another, that lenders are using MHA to squeeze out a few more full monthly payments from stressed out homeowners before finally lowering the foreclosure boom on them.
President Obama, this is not good. And dear reader, if YOU have anything positive to say about MHA, say it here, please. Negatives are of course welcome too. Look for Part V whenever I have time to crank it out, and thanks for the great feedback, commenters, I'm learning from this and hope others are as well.