The Obama Administration's Making Home Affordable program is a dismal failure and administration officials are not moving forward on creating a new program, preferring to tinker with the failed one.
Unless Congress gets in the act, we are all facing a long, long period of decline home values, foreclosures and the general disruption and damage this will do to the overall economy and our communities.
The Treasury is going to "pressure" banks to move forward within the context of the original program. A failed strategy will be tinkered with rather than creating something that could actually help people now, before they go under.
The New York Times: http://www.nytimes.com/...
Last month, an oversight panel created by Congress reported that fewer than 2,000 of the 500,000 loan modifications then in progress had become permanent under Making Home Affordable.
This is the crux of the issue:
Some senators contend that the Treasury program, addressing mortgages whose low promotional interest rates had soared, is outmoded. At this point, foreclosures are being propelled by joblessness, which is sending millions of previously credit-worthy people with ordinary mortgages into delinquency.
Within the Senate, some discussion now focuses on pursuing legislation that would create a national foreclosure prevention program modeled on one started last year in Philadelphia. That program forces mortgage companies to submit to court-supervised mediation with delinquent borrowers aimed at striking an equitable resolution before they are allowed to proceed with the sale of foreclosed homes.
Further, the Obama program locked out many homeowners whose original mortgages were traditionally written, but who are now trapped in high interest contracts and massively underwater after the equity in their homes evaporated in the general crash.
It is my contention that keeping people in their homes, even if they lost title, would be the single most powerful stabilizing force to our communities -- preserving the tax base, keeping neighborhoods stable, protecting children by keeping them under a roof and in school and generally allowing us all to weather this storm -- and should have been a bottom line priority for the Administration.
But as it is with anything aimed at Main Street, the program was weak to begin with and banks were allowed to manipulate it for their own profit. They thought they could keep the Federal bail out funds and force people out of their homes.
Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments. [my emphasis]
Treasury people, i.e. Mr. Barr, have the gall to use the word "shame" and banks in the same sentence. I am ashamed of an Administration that would even sanction such rhetoric at this point.
Full Disclosure: I have a traditional mortgage through my credit union. I am $ 80,000 underwater and have lost my entire down payment as I bought of necessity at the peak of the market. Although I qualify under most of the guidelines in the program, the fact that I used my credit union, rather than a bank, put me outside the scope of the program, despite the fact that I am am in danger of permanent disability forcing me out of my home. All I wanted was to rewrite the mortgage at a lower interest rate so that I would have the chance to pay down the principle before I was forced to sell. My credit union absolutely refuses and the private company I sought out to renegotiate for me, while initially sanguine that they could help me because of my disability, was forced to withdraw because the program did not reach down to the credit unions.
As I am close to retirement/disability and have lost at least as much in my mandated retirement accounts, what I call "The Great Restructure" (not Depression 2.0), has decimated everything I worked for my entire life.
This is a waiting game for me. If my health gives out before the much vaunted recovery, I am toast.
Please do not bother to mention my pony fetish, or how I need to wait for xxx dimensional chess, or how the problems are overwhelming, etc., etc., ad nauseum. I will not respond to your comments.
Many, many ordinary Americans are caught up in this housing debacle through no fault of their own. Neither do I accept that there is a significant portion of home owners out there who are to blame for their circumstances. Fraud on the part of the business people involved is responsible for this disaster. Can we find some people who never should have gotten mortgages in this mix? Absolutely. Are they the root of the problem? Absolutely not. Most people were victims of their circumstance. People of color were shunted into the worst mortgage formulas even when they qualified for better terms.
We are now in a long term spiral downwards which could have already been alleviated had the Obama Administration placed a priority on stabilizing the housing market, instead of the banks.
As Naomi Klein has pointed out, the cost of the bailout was in excess of paying off every single mortgage in the USA.
Had we put the money at the bottom, most of the outrage around here about what Wall Street and the Bankers are doing would have been moot.
But we can't do something as simple as giving the man in the street cash can we? That is irresponsible whereas giving it away to Goldman Sachs is wise monetary policy.
So here is just one reason Obama is losing me and lots of others out here.
We didn't anticipate all of this during most of the campaign, so don't bother to tell me what Obama promised or represented or any of that other stuff.
The fact is this is where we are now, and I am waiting for Obama to wake up to the reality of what is on our plates now. The times changed; he needs to change with them.
People like me cannot afford to wait. People dying of lack of health care cannot afford to wait.