New Orleans We have now gone past tearing out our hair in frustration and are moving to full throated screams for help, but nothing seems to be putting a dent in the hapless and incompetent fiction that we have a national foreclosure modification program.  Recently the Obama Administration announced that it was moving another couple of billion from the unspent TARP funds that were supposed to be securing modifications over to the Treasury Department’s Hardest Hit fund that is supposed to be helping homeowners hold on to their houses when they are unemployed.

Despite any other pretense, all this really does is move money to the states to try and push money to jobless to subsidize mortgage payments, which means subsidize banks, for a little while until a miracle happens (someone gets a job and can start paying) or the bank forecloses anyway.  Since Treasury is unable or unwilling to push the banks to actually implement the modification program, the TARP money to support the modifications is simply sitting there, while millions face foreclosure.   In this cynical funds transfer absolutely nothing is changing to make the foreclosure modification program more effective, so this is really just a way of allowing the White House to play politics by shifting some money to states and getting the thanks from some governors and Congresspeople, taking some heat off of them as we move to midterm elections.

The facts are still stark:

• Less than 400,000 so-called modifications for the 6,000,000 homeowners facing foreclosure.
• Less $321 million spent of over $30 billion authorized from TARP for the foreclosure modification program (yes, that’s hardly more than 1% of the money allocated (see above!).

Statehouses and Washington are claiming this funds transfer will help hundreds of thousands of people facing foreclosure.  Let’s hope so, but if it does, it will only help a small percentage of people for a small amount of time as the seemingly unstoppable foreclosure machinery continues to grind forward with nothing but words from the government in the way of the banks.