The centerpiece of the Obama administration's foreclosure mitigation policies is failing. Republicans and Democrats in Congress both readily acknowledge the effort, called the Home Affordable Modification Program (HAMP), is a boondoggle of a government program. The only entity that won't face the facts is the Department of the Treasury, which runs the program and has been desperate to hide the program's poor performance.
HAMP modifications start with a three-month trial, then -- if the program's one-size-fits-all conditions are met -- become permanent. The problem for Treasury is that more than two-thirds of homeowners in the program never make it into permanent modifications. Treasury initially promised that HAMP would "reach up to 3 to 4 million at-risk homeowners" and reduce their monthly payments to "sustainable" levels. But the most recent progress report, released last week, shows only 170,207 permanent modifications. At best, that's six percent of Treasury's goal.
By anyone's standard, a six percent success rate is a pathetic result, and only underscores that the reality of HAMP is far from the promise.
But instead of fixing its program, Treasury is trying to move the goal posts -- by counting the program's 1.3 million offers of temporary modifications as an indicator of success. At last month's hearing before our Committee, the head of Treasury's Homeownership Preservation Office, Phyllis Caldwell told skeptical members of Congress that "the program was designed to offer three to four [million] homeowners an opportunity for a mortgage modification - not a permanent modification, an opportunity."
Treasury's revisionism makes little sense, except as cover for another massively expensive, failing government program. It's clear that the initial promise of 3 to 4 million "sustainable" mortgage modifications was referring to permanent, not temporary, fixes -- to suggest otherwise is an assault on common sense and insults every American facing foreclosure and seeking permanent relief through this program. To pretend that temporary modifications count toward HAMP's target number glosses over the costly toll exacted on those who find false hope in the promise of HAMP.
These cash-strapped homeowners are sending mortgage payments to banks in a desperate effort to avoid foreclosure -- believing that temporary assistance will lead to permanent mortgage modifications to keep them in their homes. The sad fact is that the HAMP mortgage modification plan, in most cases, won't ultimately grant them the permanent modification enrollees believe they're on track to receive. This only delays foreclosure -- but doesn't prevent it -- and these homeowners wind up wasting their mortgage payments. It's cynical for Treasury to log progress toward its goal of preventing "3 to 4 million" foreclosures by counting homeowners who might actually be worse off, thanks to HAMP.
As a program, HAMP has chronically underperformed in almost every metric. The facts are clear, even if Treasury's report is not. The Obama administration needs to focus on helping families find ways to weather troubled times and stay in homes they can afford instead of finding ways to mask the program's failure.
The current economic numbers are fantasy, and the sooner the truth is made real, the sooner we can pick up the pieces and start building a "real" economy again. (with real industries)
What? No. That's what I thought. All hat. No cattle.
I would call it hypocrisy, but it's just being Republican.
The authors of this piece would have a lot more credibility had they policed Bush's policies AT ALL.
Where were all the fiscal conservatives when Bush was running this country into debt?
Banks could re-write most mortgages - after all, Banks are now borrowing money at zero interest - they don't have to hold people to their origination rates -
Those higher house prices were horrible for America. If the an advanced economy can't provide shelter, the most basic human necessity, at a reasonable price, then that economy has failed.
Change your viewpoint. 2000 - 2006 was the real "housing crisis".
What's happening now is wonderful. Prices on a basic necessity are dropping. This means that our economy is doing a better job at meeting basic human wants. We should all cheer. This is the housing recovery.
Lower prices on basic necessities is always good. This would include food, healthcare, housing, education. An economy that provides these cheaply to the majority of the population should be deemed successful.
The point is this: the market is working wonderfully now. It is saying, very clearly, that prices need to be lower to clear the market. This shows up in the huge inventory numbers which say that there simply are not enough people willing to buy at today's prices. This may not be something current homeowners want to hear, but it is reality.
I saw your post below - I live in one of the supposed "crisis" areas. We sold our house in 2005, ran the numbers and decided to rent for a few years until we felt that we were getting value for our money. I still am not happy with the value proposition of buying, so we will wait another year or two. When we are happy with the value that is offered for the price, we will buy. Simple.
Here's where this is really great - it means for the same money, we can live in a better city, have better schools for our children, have a nicer home. This is great. And this is great for all future homeowners - more value for their money.
Conservatives are Americans with amnesia, or, better yet, they become good liberals when tragedy strikes their family and they turn around and they realize we are a community and they might need a hand.
Calling President Obama a liar and anti-American, harvey, you are simply a punk with a keyboard. Keep pushing the liberty, freedom, fox news meme. You've got zero credibility here...but keep believing you are a 'Great American' as your hero Hannity likes to zing around. Disgusting...especially when you bent over for Bush for 8 years without nary a peep. So many dead, so many billions wasted...and it's Obama who is the problem.
What a dolt you are, harvey!
Bailing out people for their bad decisions creates a moral hazard. I don't want that to occur. Individuals are free to make their own financial decisions and if they don't work out then it's up to them to deal with the consequences. The American "community" deals with these issues through the bankruptcy courts.
Again, where were you, Darrell, from 2001-2008 when we had horrible pieces of legislation that fixed numbers to a ridiculous degree? I hear you now, why didn't I hear you then?