More than 40 pct. leave Obama mortgage-aid program

[newtothegame]

Source: AP

The number of people dropping out of the Obama administration's program main program to help those at risk of losing their homes outstripped those who received aid for the second-straight month.

About 530,000 borrowers have fallen out of the program as of last month, the Treasury Department said Tuesday. That's more than 40 percent of the nearly 1.3 million enrolled since March 2009. It's a sign that foreclosures could rise and weaken an ailing housing market.

Read more: http://finance.yahoo.com/news/More-than-40-pct-leave-Obama-apf-131728763.html?x=0&sec=topStories&pos=3&asset=&ccode=

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Can't blame the guy for trying, but GEEZ....

[stray cat]

1. Many refused to verify their income and dropped or could not verify income and were dropped

[dkf]

3. Originally Obama's plan let them in without verification.

When they were asked to do so for the permanent mod they couldn't do so. The original numbers overstated thej I true eligibility based on if they could afford it. Did they mean to jerk us around on the viability of this program?

[Common Sense Party]

2. Ouch

"But as of mid-May only $132 million has been spent out of a potential $75 billion, according to the Government Accountability Office."

Repukes shouldn't be whining about out-of-control federal spending, I guess.

[harun]

4. Program is a farce, I know people trying to get help and their banks are thwarting all their efforts

[MadMaddie]

7. So it's the banks once again that are putting up the

roadblocks, the banks aren't lending money to small businesses either.

[harun]

32. Yah my buddy goes to the gov't site, put's in all his info, it says

he qualifies, then goes to the bank and they say "You don't qualify." He asks why and they will not give the reason.

No one is getting help from these programs except the banks.

[MadMaddie]

33. That's why they should have been allowed to fail

They are for their own profit and not customer service.

No more bailouts.

[Oregone]

5. How do you make any sane aid program...

When the principle people owe on their homes outstrips any sane measure, sitting on the cusp of a collapsed bubble?

The people get left holding the bill at the end of the day for a system intentionally inflated to benefit the few elite at the top.

The government could try and mitigate some of the problems by offering low-interests, no-closing costs, direct to consumer loans (that they retain ownership of, and profit from). But its still wrong to keep people paying interest on principle that, for the most part, doesn't exist.

[David__77]

11. What's wrong with orderly bankruptcy?

I think it is probably unrealistic to make a goal to keep almost all or even a large majority of people in homes with principles that far outstrip their ability to pay. The "original sin" was in the decision to buy rather than stay where they were or rent. That sounds harsh, but there cannot be another way beside orderly bankruptcy that does not further distort things by trying to prop up high housing prices to the detriment of larger numbers of people, as well as future, would-be homeowners effectively priced out.

[Oregone]

12. The original sin was banks giving out risky loans...

...since they could leverage against the risk by creating complicated financial instruments.

[Lance_Boyle]

13. Someone applied for each and every one of those loans.

I daresay there was not even a single solitary instance of a bank accosting an unsuspecting victim on the street and forcing him into a loan he had very little chance of repaying. Seems like a bunch of people here have already forgotten the news from a week or two ago that the vast majority of foreclosures are hitting wealthy people who intentionally overbought (gambled). The foreclosures need to happen - a market must be allowed to suffer a correction when one is warranted.

[Oregone]

15. Yup. And in sane times, those applications are rejected by the banks

They applied--they didn't hold a gun to the bank's heads. Normally, people always want what they can afford. This time around, no one was there to tell the "NO", since they figured out how to mitigate risk on the most irresponsible of loans. This naturally led to more demand, and higher prices, which led to riskier loans on the higher priced properties....etc.


"I daresay there was not even a single solitary instance of a bank accosting an unsuspecting victim on the street and forcing him into a loan he had very little chance of repaying."

There are plenty of criminal instances of brokers falsifying income verification, as well as lying to customers about how much they can afford. Mortgage brokers aren't always the most savory of characters. People have been going to jail for their involvement with this bubbling debacle.

http://www.miamiherald.com/static/multimedia/news/mortgage/brokers.html

But you are right.....the ORIGINAL problem is ALWAYS the stupid people's fault who need credit! Suuuure. Banks have NO responsibility to make sane loans

[Lance_Boyle]

17. So you do see where borrower greed played into it.

Yes, the banks should have rejected many loans. But borrowers should never have applied for many of them, either. This is the problem - the banks got what they wanted. Legal requirement for the borrowers to repay, or face foreclosure. The borrowers got what they wanted - loans they should never have gotten that put them into houses they should never have been in. Now the banks are making good on the deal - foreclosing when borrowers fail to pay - but for some reason a lot of people here seem to think that the borrowers should get to stay in the houses they overbought and the principal owed should be reduced. That's just not workable - it rewards borrowers' bad behavior and punishes banks for adhering to their contracts. The solution is quite simple - adhere to the original loan contract. If you can't pay, get out.

[Oregone]

19. What's changed? Borrowers are always greedy

If "borrower greed" was a direct factor, there would always be perpetual bubbles and foreclosures. "Borrowers greed" isn't new. Banks giving loans out to any greedy, short-sighted person is (and their ability to mitigate that risk was greatly enhanced in the last decade while doing so).

Usually when looking for the cause ("original sin" as you put it), you look at how the system has changed (not what was always there)

[aquart]

31. You are wrong.

I KNOW it was the set policy of at least one now failed bank to talk people into loans they could not afford where the bank absolutely knew they were not reasonably eligible. The bank refused to hire anyone who expressed any kind of conscience on this matter.

[sofa king]

35. As a matter of fact, I was an unsuspecting victim on the street.

Specifically, I was looking for an apartment to rent in Arlington, VA. My first real estate agent wasted an entire worknight showing me places I couldn't afford, then telling me I could afford them if I bought them with a low introductory rate mortgage.

However, I laughed at the guy and never called him again. Not everyone knows themselves as well as I do, I guess.

[activa8tr]

16. There was often no "original sin" by the borrower, who had a job and lost it!

I hate this myth that people in trouble on their mortgages are most often to blame for their own mess.

Yes, if they cannot make the payments on the mortgage, they lose their home, that's often what happens when people become unemployed.

[Lance_Boyle]

18. It's not a matter of sin.

Losing one's job is bad luck. Notice that in most other cases people who suffer bad luck are not given free or reduced-price houses because of it (at the expense of everyone else who keeps paying on his/her mortgage as contracted). Life ain't fair.

[Wednesdays]

20. Life ain't fair!

So, suck it up, peons!

Personal responsibility! Personal responsibility! Personal responsibility! :spank:

[Ignis]

26. Lucky Duckies!

[KamaAina]

24. If losing one's job these days is "bad luck",

the corporatists (in both parties) are the shattered mirror, spilled salt, black cat, etc.

[David__77]

21. My wording wasn't the best, but..

...factoring in risks like potential unemployment is something everyone should do prior to making the decision to purchase a home. I'm not saying anything I don't tell myself or wouldn't tell a friend considering doing that. And it's definitely true that if everyone used that level of discretion, housing prices would come down considerably, making it more truly affordable to the majority of households.

[Oregone]

23. "factoring in risks like potential unemployment is something everyone should do prior..."

Yes, banks don't need to factor this in. Just people. Banks just need to chop up their mortgages and sell em off in pieces. No sweat off their back.

[David__77]

34. I agree that finance capitalism is fundamentally immoral.

So, then, what should replace it? There is no easy solution. I think it would be a good thing to nationalize banking and finance completely, but if we don't do that then I see no good solution.

[Oregone]

36. Id prefer a smart hybrid

Direct government to consumer loans that the government retains ownership of (and hence, profits from), brokered by private third parties (like credit unions and what-not). Pay the private sector a premium for taking on the overhead and efficiently distributing the credit, but ultimately, make the government the gatekeeper of the qualifying criteria and regulations (and somehow create a mechanism that punishes brokers who originate bad loans retroactively so that there is some element of risk involved for the brokers).

[DirkGently]

30. Bankruptcy for borrowers, but not banks?

Bankruptcy's fine, but let the borrowers strip the principle down to market value. That's all the lender can recover on its collateral anyway.

The distortion here did not occur due to borrower greed. It occurred because banks and financial institutions chose to create the myth that "real estate prices never go down" because it made worthless mortgage loans into AA security gold. This caused prices to skyrocket, and redefined what a reasonable mortgage loan was.

Most people believe a loan officer or mortgage broker when they tell them that an interest-only / variable interest loan is the normal thing to do, or that it's responsible to buy more mortgage than you can afford, under the assumption you can refinance later.

The fact that the dishonest lending practices worked, that people were fooled or coerced into buying in a bubble market is the fault of the purveyors of the myth of endless real estate price increases -- those that sought to and did profit from it tremendously -- not the consumers with less knowledge and leverage who bought into it.

We cannot have this cycle repeated over and over and over agan, where investors and banks with capital to burn start a bubble, reap the profits, and then either parachute out or have the U.S. taxpayers bail them out, and with the consumers and taxpayers left holding the bag because they didn't have the knowledge or resources to see it coming. The result is wealth siphon, sucking money out of ordinary people's homes and IRAs and nickel-and-dime stock investments, with the same "masters of the universe" benefitting every time, while we shake our heads at the lack of "personal responsiblity" from those who were suckered, exploited, and taken advantage of.

Enough.

[brettjv]

37. This ^^^

Well said ...

[Hosnon]

6. My line of work intersects with this program quite often. It's extremely disappointing. nt.

[pattmarty]

8. This didn't have to be this way. Look at ALL the money that went to........

.........banks, auto industry and others. And, just fuck the little guy. The Obama admin SHOULD have and COULD have done more. File this with health & financial "reform". We are still waiting for a measly fucking amount for unemployment and I am afraid to see what immigration & environmental "reforms" will look like. Will be voting "Green" this November.

[tinkerbell41]

9. Took me from May to December

It was a full-time job. i was told by The Hope for Homeowners people I didn't qualify because I lost my job, if I would have given up and listened to them I'd be on the streets. Really if I was working I could have never done it. It took so much research and phone calls everyday to my Mortgage servicer. In the end I had to fax my Mortgage servicer instructions on how to calculate my UI benefits. It was and is a fight. I am underwater, not by much, I expect to be out of work again shortly, but my mortgage payments are currently cheaper than rent in my area.For me it's a way to buy myself time, until the work situation improves.
This isn't this administration's fault. No way in hell, did the banks train their employees properly too bad they didn't hire me I knew the rules backwards and forwards.

[Missy Vixen]

14. It took us from March to January of '10

It also took a phone call from Senator Murray to the CEO of our mortgage company.

We got our loan, but we resubmitted paperwork an average of once a month for those ten months.

The mortgage companies got paid whether they executed loans or not. THAT was the holdup, not the mortgage holders.

[DirkGently]

10. Asking the banks nicely won't work

I'm mildly underwater on my 2006-purchased home (and having no trouble making the payments on a classic 30-yr fixed note) and I called the lender when the first version of the administration's program was introduced. It was a short conversation that went something like this:

"Well, there's no equity in the property. 'Bye."

If there's anything we've learned (or re-learned) from this crisis, it's that banks do what they want, until you tell them to stop. What's really screwed up about the present situation is that the banks could probably collect more money from a lot of distressed borrowers than they're getting from foreclosing ... but won't.

Maybe there's a tax benefit, maybe there's some kind of insurance, but what's certain is that the system of default, foreclosure and sale hasn't changed, even as the foreclosure law firms and the courts themselves are beginning to seize up under the sheer volume of foreclosures.

We can do better.

[SomeGuyInEagan]

22. Banks - and corporations - will only respond under threat of lawsuit, fine or prison ...

Which is why I will never support tort reform - suing is the last thing we have.

Corporations simply thumb their noses at laws and gladly pay fines, because few fines amount to anything more than a cost of doing business.

Prison time for corporate malfeasance? Rarely, even when people die or are injured.

Unless the city/state/federal gov'ts get serious about cleaning up businesses in this country, all we have is lawsuits. Hate to say it, but that is the only thing keeping the people running much of corporate America in line these days (if that is at all).

[DirkGently]

25. Simply allowing bankruptcy cram-downs of 1st mortgages

would be a start. Bankruptcy judges do it every day with secondary liens. The mortgage shouldn't be able to exceed the value of the property -- not when the financial institutions' lending practices directly lead to the market bubble, anyway. And it wouldn't harm the lenders, who can only collect market value (or a bit less, really) at a foreclosure sale anyway.

Balanced against the harm these foreclosures are doing to neighborhoods and families, it should be a no-brainer.

[SomeGuyInEagan]

28. "And it wouldn't harm the lenders ..."

I agree on that point, at least from what I have read and seen.

Many people facing foreclosure want to stay where they are and would if the bank would work with them. Yet many banks are so willing to let a property go into foreclosure and possibly disrepair, only to try and sell it at a loss, well below market value.

[DirkGently]

29. It's true. Foreclosures are bought are firesale prices, and

in the meantime there are HOA / Condo fees, casualty insurance, and maintenance. There's a lot of leeway that could be given to borrowers without denting the lenders' precious bottom line -- in fact in some cases lenders may be losing money by foreclosing.

This is without taking into account the fact that lenders and financial firms created the housing bubble, or that foreclosures harm not only the families being evicted, but the communities where the foreclosures are taking place, by lowering property values and turning properties into high-turnover rentals owned by uncaring investors.

It's a mess, and while some borrowers simply can't pay anything, even that is largely the fault of the wealthy interests who crashed our economy for the sake of a few more zeros on their bonus checks. It's bullshit, it's harmful, it's dishonest, and it's stupid.

We've paid all of this money to keep banks afloat. They could at least not throw out borrowers willing to pay a reasonable monthly amount simply out of bullheadedness, bureaucratic inertia, or spite.

[DirkGently]

38. Big lenders often behave stupidly

Short sales, for example, generally garner much more money on underwater property than a foreclosure. Yet lenders make borrowers jump through hoops of fire before approving them. It's just easier to foreclose because the machinery is already in place. Short sales and workouts are complicated and time-consuming, but that's because the lenders make them so.

I've seen no indication the adminstration's efforts have even made a dent in this problem, which is too bad, because it could be done without harming the lenders -- in this case they're simply too big, too slow, and too stupid to do the right thing.

[Ignis]

27. No jobs = No mortgage payments

Fix the cause of the problem, not the symptom!

:banghead: