Obama is out to save the world again. I read a great quote about that today at ChicagoRay’s by H.L. Mencken: The urge to save humanity is always a false front for the urge to rule it.” You probably heard last week that President Obama has ordered mortage bankers to accommodate customers who are out of work and delay or lower their mortgage payments for awhile. You probably know that a similar program, known as HAMP, has been in effect for a year. Democrat Rep. Jackie Speier (D-CA) says HAMP has has failed miserably.
The program started over one year ago and is known as the Home Affordable Modification Program (HAMP). Designed to provide permanent payment relief, only 116,000 of 1.7 million possibly eligible completed the paperwork or qualified.
This week the announcement came that mortgage lenders will have to reduce payments to NO MORE THAN 31% of a borrower’s income. Weren’t many of these loans the result of no money down and no qualification requirements? Disaster happens when we allow Barney Frank and Maxine Waters to tell lenders what to do. Frank should be out of office and behind bars.
Borrowers who are in bankruptcy will not be eligible for mortgage relief under the federal program. Lenders also are being directed to evaluate delinquent borrowers for the program before referring them to foreclosure.
Payments may be reduced to as low as 2% interest for five years and loans might be extended out to 40 years. Lenders reducing the principal owed on a loan if the amount if 15% more than the home is worth, will see some “financial” (taxpayer) “incentives.” That’s not all: the “government” will double the amount it pays to lenders that help modify second mortgages.
“It has failed,” said Rep. Jackie Speier (D-CA-12th)., at hearing of the House oversight committee. “It has failed miserably and unfortunately we are incapable of saying: OK, this was an experiment, it didn’t work, let’s try something else.”
Neil Barofsky, the Inspector General (independent watchdog) for TARP, said the original program was not well-though-out and went through constant changes. Then, the program dropped the requirement to provide written proof of their incomes! A huge backlog occurred – months of waiting for the applicants, and they still can’t afford their homes.
Then, in early 2010 another change: Treasury said homeowners would need to show proof of income upfront before the process can go forward. That makes sense – one year later!
Today, Barofsky says “many borrowers are at risk of re-defaulting on their mortgages even after receiving help under the federal program –especially those who owe significantly more than their homes are worth or have second mortgages.”
Underscoring the depth of the foreclosure problem, more than half of the borrowers who received loan modifications on delinquent mortgages defaulted again after nine months, according to a federal report released Thursday.
There has been a lot of craziness and inconsistency coming out of this Administration. Some homeowners awaiting qualification were foreclosed on anyway. Today 500,000 homeowners are awaiting their verdict.
Related and Background:
Tracking the Mess of Fannie and Freddie