Zach Carter's most recent post
over at HuffPo reminds us that people who think that Treasury Secretary Tim Geithner gives more than the steam off of his piss and some lip service to homeowners facing foreclosure are, simply, kidding themselves.
Yesterday, I posted a diary entitled: 50-State Foreclosure Fraud AG: 'We will put people in jail.' Among a handful of related sub-topics on foreclosure fraud covered in that post, it was very much about the government's failed HAMP (mortgage modification) program, which has turned out to be a pathetically lame effort to, supposedly, keep people in their homes. In fact, as that blog entry explains in great detail, HAMP was/is little more than another veiled bailout for the Wall St. too-big-to-fail banks.
As Georgetown Law Professor Adam Levitin, widely considered to be one of the country's leading consumer advocates when it comes to foreclosure law,
noted in the post (h/t to Naked Capitalism Publisher Yves Smith):
Ultimately, the message to take away from HAMP is that the Obama administration just isn't serious about helping homeowners. The plight of distressed homeowners' is subsidiary to protecting the banks from having to take serious write-downs. There's plenty to say about the politics of that decision, but from an economics perspective, I just think it's short-sighted. The economy will not see a robust recovery until there is serious consumer deleveraging and a stabilization of the housing market. Those two problems go hand in hand, given that mortgage debt is the biggest chunk of consumer leverage. And there really isn't any way to deleverage consumers without there being losses for the financial sector.
So, without further ado, here's a link to the blatant and disgusting truth, as explained in a piece of reality dished-up at HuffPo (and Alternet) by Zach Carter: "Geithner Blocking Legal Help For Foreclosure Victims."
Geithner Blocking Legal Help For Foreclosure Victims
Zach Carter
Huffington Post
Updated: 12-15-10 11:19 AM
WASHINGTON--Treasury Secretary Timothy Geithner has authorized big payouts to banks in an effort to encourage mortgage modifications, but is preventing borrowers in danger of losing their homes from accessing legal assistance under the Obama administration's foreclosure relief plan -- even when banks are wrongfully or fraudulently attempting evictions...
Carter continues on to explain:
--In 2008, the Treasury Secretary was granted broad discretionary power by Congress to fund virtually all efforts necessary to prevent foreclosures.
--In fact, the Treasury Secretary approved $7.6 billion in outlays to help states prevent foreclosures and modify mortgages, too. However, "...the rules dictate that funding cannot be used for legal aid, dramatically blunting the impact of the program."
Just so we're clear here: banks and investment houses may spend billions in taxpayer-provided funds on lawyers, lobbyists and p.r. services; but, to reiterate it, even when consumer foreclosure advocacy money is preauthorized on the hill...
...the rules dictate that funding cannot be used for legal aid, dramatically blunting the impact of the program. States initially applied for funds from the program in the spring of this year, but the Treasury refused to extend money for tackling legal bills. For cash-strapped borrowers battling foreclosure, such legal fees can make the costs of defending their homes insurmountable. Consumer advocates say the Treasury's legal reasoning is specious...
..."I don't see anything specific that would prohibit them from using this money for legal aid attorneys," says Ira Rheingold, executive director of the National Association of Consumer Advocates...
Carter tells us that Ohio Senator Sherrod Brown and 30 members of the House of Representatives sent a letter to Tim Geithner asking him to reconsider his position. But, "Geithner refused," as it was noted in a memo issued by Treasury General Counsel George Madison.
The memo claimed that...
...Legal aid services are not necessary and incidental, as a matter of law, to the implementation or effectiveness of the HFA Hardest-Hit Fund, because: (1) Congress has provided other specific appropriations that fund the same type of legal aid services proposed by the state Housing Finance Agencies ("HFAs"); and (2) legal aid services are not necessary or essential to the implementation of a loan modification program...
Of course, Geithner's lead counsel was talking about a HAMP loan modification program which, as Yves Smith pointed out just yesterday...
...leaves 95% of borrowers in a worse negative equity position than before.
Worse, a formula in the HAMP program allowed banks to focus the mod program on the high negative equity homes. These were the ones the banks with large second mortgage portfolios were least likely to foreclose upon, since in those cases, the second lien would clearly be wiped out. Admittedly, they would also be the ones where a mod is a bigger win for the investor...
So, I'm sure we're all simply shocked to read that Carter also comes to the conclusion that the benefits to Wall Street are quite obvious. Blocking legal assistance to Main Street "...will result in fewer challenged foreclosures, and bigger bank profits from the foreclosure process. It will also prevent the public release of loan documents which investors might use to sue banks where mortgages have been improperly handled."
Well, we can't let that happen, can we? Then again....Yes. We. Can!