New Orleans Secretary Shaun Donovan and President Obama made yet another HUD announcement of another faux “program” to help foreclosure victims, which once again will not work and plays yet more patty cake with banks and their loan servicers. These charades have become something like a marker of seasons passing as we record yet more impotence of the federal government in dealing with the foreclosure crisis. This time HUD announced for its mortgage holders an extension of forbearance from the sometimes three or four months offered to unemployed seeking to hold onto their houses to a period up to a year. Wake up! Stop yawning! They want this to seem important.
Even though it is not important or much of anything, unfortunately, other than another press conference, it would seem.
This announcement and program cost no money. Remember Congress in the original bailout set aside $46 billion for foreclosure modification supposedly to help 3 to 4 million homeowners facing foreclosures. Months and years go by…tick-tock, but so far only $2 billion has been spent in this regard and only about 730,000 have won permanent modifications.
Of course a homeowner would have to be eligible, and eligibility is determined by the banks and servicers, and of course their participation in this program like all others is “voluntary,” and don’t forget that eligibility could also be impacted by other regulatory requirements or investor restrictions. Make no doubt about it, it is much easier for a rich man to get into heaven, than for a poor working – or unemployed — stiff to get a loan modification under HAMP. That was true before, and it is just as true now.
This new “program” is a mandatory extension. Mandatory though fits in the same sentence with voluntary participation and arbitrary, discretionary management of the “program” by the banks and their servicers with virtually no federal supervision or accountability.
Next month, HUD and the President are going to announce another new program. In this one foreclosure victims will have a “pray for the files” day, where they pray that their foreclosure files will be lost yet again by the banks and servicers. This is a prayer that statistics would establish is virtually a sure thing, and when assisted, advocates almost always find that this happened somewhere along the chain.
The month after that HUD and the President are going to announce another new program. This one will be a raffle held on “Modification Mondays” throughout September. Any homeowner whose name is drawn on Modification Mondays will win a review of their foreclosure case, which will guarantee a six month forbearance on their foreclosure.
Eventually, maybe they will run out of ideas for fake programs and press conferences and really create a mandatory program that is run by the government, spends the money allocated, and guarantees real relief for homeowners facing foreclosures. Not yet obviously, but hopefully some day in our lifetimes.