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”.
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…