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On Wednesday this week, the Obama administration announced which companies would get the initial outlay of government money to help those homeowners fighting foreclosure. I have written on BiggerPockets Blog back when the sorrowfully small amount allocated for Obama’s loan modification programs was announced a few weeks back calling the $50 billion amount a “slap in the face”.
I was right then, and I’m right now calling this announcement “another slap in the face”.
Here’s why…
The initial outlay of $9.9 billion is too little and it’s going to the six industry insiders who are treating foreclosure victims the worst!
Here’s the list the AP published:
This program only has a current allocation from the $750 billion TARP funding of $50 billion. As I said before, that is a laughable amount considering the total and it is a true indication of this Administration’s disdain for homeowners facing foreclosure.
I have contended for months with many of Obama’s advisers being Wall Street insiders before coming to work for the government, the foreclosure victims were fighting a losing battle. Regardless of campaign trail promises, the monied elite would prevail when it came to getting Obama’s attention.
So far, Obama is showing he’d rather allow the banks to “wait it out” and if that means more homeowners end up losing their homes, so be it. Of course, this strategy the banks are employing – dragging out loan mod procedures until they wear down the homeowner, eventually foreclosing – is going to work. And by “work” I mean put a lot of homes on the books of the banks just in time for the recovering housing market (and Fed created inflation) to turn those homes into little gold mines.
The banks – yes, including the banks listed above – are horrible at modifying loans even after the new plan was announced back on March 4th. Their behaviour didn’t change. It’s like they didn’t even hear the President’s speech on how much “help” was right around the corner. Well, the corner is here, and nothing substantial has happened.
Let me quote the AP again,
“Still, many borrowers and consumer groups claim the modifications offered by the lending industry to date don’t do enough to help cash-strapped homeowners, despite more than a year of public prodding from regulators.
Fewer than half of loan modifications made at the end of last year actually reduced borrowers’ payments by more than 10 percent, data released last month show.”
This should tell you exactly what the banker’s end game is.
If you don’t believe me, you should read all the comments in the “mortgage servicing” section of my blog. Those folks are reporting the most heinous treatment I could ever imagine. Many are paying on time, underwater, can prove their income, and want to save their home. They are only asking for a fixed rate modification so their payment won’t jump 50%. They are only asking for what the President promised in his press conference.
Even these borrowers get treated like lepers!
I can only conclude the “Great Banking Real Estate Grab” is underway…and the Obama administration is going to standby a let it happen.
Heck, he’s going to pay them $50 billion of taxpayer money to do it!
Until next week…
Article Author:
Rob K. BlakeRob K. has written 49 articles for us.
Visit Rob K.'s Website: http://themortgageinsider.net
Rob K. Blake, a 15 year veteran of the mortgage industry, is a renowned public speaker, author, and former radio talk show host. His blog, TheMortgageInsider.net, is dedicated to educating mortgage consumers, mortgage providers, and investors about both mortgage and housing markets.
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{ 7 comments… read them below or add one }
This person writing this column knows jack. Until all the facts are known, please, keep your opinion to yourself.
Although I may not disagree with all your points, let us review the people who are being foreclosed on. Investors, those who could not afford the mortgages to begin with, etc. I am not saying all these banks are innocent, but I am saying the mortgagors need to be held accountable. So far, no one has. It is a shame! Much of these people deserve to be foreclosed on.
Those who truly have a hardship, my heart goes out to you!!
Kyle – Many people who are being foreclosed on here are certainly at fault. I think Rob’s point is that if you’re going to save the homeowners (even if they are at fault in many cases), then do it and don’t take half-measures, while cow-towing to the banks and other large interest groups.
You have a right to be angry that many people were irresponsible, and that is certainly a factor in this whole mess – a big one – but there is a lot of other blame to go around as well.
Kyle,
You should read the post a little more carefully before commenting. All the facts are known…and Obama is slapping in trouble homeowners in the face.
Obama never promised his plan would help house flippers or investors of any kind. Nor would it help those who committed mortgage fraud.
However he promised to help foreclosure victims – homeowners who didn’t commit fraud – and now after he gets in office, he uses half-measures and leaves who gets a modification in the hands of those companies least likely to give one.
If you have a beef with “no doc” loans and that’s what you mean by “those who could not afford the mortgages to begin with” as those borrowers who in your words should be “held accountable”, I have this to say…
Those loans at the time were legal. Stupid sure…but legal. And you can’t hold the borrower responsible for a loan program the banks in collusion with Wall Street created. Had they not created the stupid program, the borrower would have never had the option. If you want to blame somebody for “no doc” loans, blame Wall Street, not the borrowers.
Instead the government gives the Wall Street firms $750 billion of tax payer money…so they never got “held accountable” for creating the “no doc” loans.
Is that really a big surprise knowing Obama packed his staff with Wall Street insiders like Tim Geithner and Larry Summers?
I sure everyone knows the answer to that…
slap in the face . hell real people who are responsible are being slpped in the face ! we are not responsible for peoples stupid actions . they bought homes they couldnt afford . now they pay the price ! let them loose there home . hopefully they will learn from it . but statistics show that they will do it again. we shouldnt have to pay for their mistakes . slap in the face ! i dont think so !!!!!!!
I don’t think foreclosure is so bad as most people want to belive.In my opinion it’s fare and helps a lot our economy!
Great article – well written. I also see it as a slap in the face.
Too little too late and I don’t really see how it will help.
Obama is really trying to help, but it’s complicated to help everybody in the same moment. I think foreclosed people will get a hand from our president as soon as possible.