The plan to supposedly aid homeowners drowning in debt is just a money trough for the banks

[FourScore]

Home Underwater? Walk Away from Geithner's Perverse 'Homeowner Relief' Plan
The plan to supposedly aid homeowners drowning in debt adopted by Obama and Treasury Secretary Timothy Geithner is just a money trough for the banks.
AlterNet / By Zach Carter
February 10, 2010

The homeowner relief plan adopted by President Obama and Treasury Secretary Timothy Geithner has not been working for a full year now. What's worse, as the program is currently structured, its chief benefits accrue directly to the nation's largest banks, leaving troubled borrowers to twist in the wind. But despite the administration's indifference, underwater borrowers can still take matters into their own hands. If you owe more than your house is worth, just walk away.

"The rational thing for these people to do is to send the keys to the bank and say, 'Good luck,'" says Dean Baker, co-director of the Center for Economic Policy and Research. "Every month that you keep that person in their home paying that mortgage, that's a gift to the bank. So if you could keep a lot of people from sending their keys to the bank, and keep sending their checks instead, that helps the banks directly."

According to the administration's latest update on the Home Affordability Modification Program, just 66,456 borrowers have received a permanent mortgage modification from their bank over the past year, out of about 900,000 trial modifications. Even judging from the trial-stage figures, the program barely making a dent in the actual problem. Data from First American CoreLogic indicate that for 10.7 million U.S. homes, borrowers owe banks more than their house is worth (they're "underwater"). That's a full 23 percent of all mortgages in the country. Another 2.3 million borrowers are down to their last slivers of equity...

SNIP

..."You can't make a significant dent in mortgage defaults without reducing principal," says Raj Date, a former Capital One executive who now heads the Cambridge Winter Center for Financial Institutions Policy...

http://www.alternet.org/economy/145551/home_underwater_walk_away_from_geithner%27s_perverse_%27homeowner_relief%27_plan

[xiamiam]

1. banks will not even hear of principle reduction..rather put half of america

in the streets because they dont want to write down their assets..even though they will end up selling them at market value...WHY?

[liberal_at_heart]

2. My MIL filed to have her mortgage changed to meet her income six months ago

It never happened. It got stuck in pending mode, and now she has no job.

[FourScore]

3. That's sad. I hope she will be alright. n/t

[AllentownJake]

4. They really created this problem

They got rid of mark to market accounting that would have required a write down on the asset than they made a refinance program that was voluntary after the bailout. They rewrote the tax rules which will encourage banks to write off losses over time to offset their taxes. Banks essentially have assets on their balance sheets that can be turned into nifty tax write-offs over time.

Their policies encourage bad banking behavior, can't get to mad at the banks for behaving badly.

On the Mortgage Crisis, they couldn't be any more incompetent.

Their interest is in maintaining housing bubble values (which will have to come down) it isn't in keeping people in their homes or affordable housing.

[Missy Vixen]

5. We are one of those 66,456 families

We received our signed-off final paperwork from our mortgage lender last week, eleven months after we officially applied for the Making Home Affordable program. The only reason we got this far is because I called Senator Murray's office and asked for help.

There is a woman in her Seattle office doing nothing more now than working with constituents in Making Home Affordable. When I called to say that I had the paperwork in hand, we joked that perhaps I should take a photo of it -- after all, it's a mythical creature, like a unicorn...

Here's a very cynical question: Was this another bailout of the banks? Even some mortgage is better than none, is it not?

[customerserviceguy]

6. Senator Murray has some great people working with her

They went to bat for my ex and myself about a decade ago, when our Albanian exchange student was being denied a visa to travel to the US to spend a year with us.