Congressional Bailout Oversight Panel Slams Obama Administration Over Home Foreclosure Crisis

[Better Believe It]

Bailout Oversight Panel Slams Obama Administration Over Foreclosure Crisis
By Shahien Nasiripour
October 27, 2010

A key government panel keeping tabs on the bailout strongly criticized the Obama administration Wednesday for its apparent failure on a variety of housing-related fronts, from its ineffective foreclosure-prevention initiatives to its refusal to acknowledge the growing crisis sparked by widespread evidence that mortgage companies frequently take their customers' homes via fraud.

Faced with increasingly heated criticism from the Congressional Oversight Panel, the administration's representative -- the Treasury Department's housing rescue chief, Phyllis Caldwell -- hunkered down, refusing to answer basic questions.

During Wednesday's hearing, members of the Congressional Oversight Panel (COP) said Treasury's foreclosure-prevention programs "failed to provide meaningful relief," generated "false expectations," and have been a "major disappointment." COP is an independent, nonpartisan commission created by Congress.

"We are faced with a choice here," said Damon Silvers, a member of the panel who also works as director of policy and special counsel at the AFL-CIO. "We can either have a rational resolution to the foreclosure crisis or we can preserve the capital structure of the banks. We can't do both."

Read the full article at:

http://www.huffingtonpost.com/2010/10/27/cop-slams-obama-treasury-foreclosure_n_775054.html


--------------------------------------------


Bank Job: Make Rogue Corporations Pay for Foreclosure Crisis
by Ted Rall
October 28, 2010

BOSTON--"We know how to prevent foreclosures," Federal Reserve Bank senior economist Paul Willen told The New York Times. "We just need to be prepared to spend the money." Willen "sees two possible solutions: Require banks to modify loans, basically imposing the cost on them; or pay banks to modify loans, imposing the cost on taxpayers."

Millions of American families have lost their homes to foreclosure since the global economy crashed in 2008. At this writing 4.4 million more households are in severe default on their mortgages--and that doesn't count the millions of renters who are getting evicted.

Laissez-faire conservatives argue that that things will sort themselves out and that society will wind up stronger as the result of "creative destruction." But the scale of the post-2008 Depression is too big to sit on our hands. One out of four Americans face current or imminent joblessness. Poverty and homelessness are about to skyrocket.

Most frightening, there is no hope of economic improvement. Obama hasn't enacted a jobs program. There's no new technology waiting in the wings to spur economic growth, as the Internet did during the 1990s. The cavalry won't be foreign investment--the rest of the world is struggling too.

Read the full article at:

http://www.commondreams.org/view/2010/10/28


--------------------------------------------


Top Fed Official On Government's Foreclosure Prevention Efforts: 'Three Years Of Failed Policies'
By Shahien Nasiripour
October 25, 2010

One of the Federal Reserve's top economists denounced the Obama administration's approach to stemming the growing foreclosure crisis, saying it's part of "three years of failed policies" intended to help homeowners avoid losing their homes.

Willen said that calling on mortgage companies to voluntarily modify mortgages would not even make a "modest dent" in the foreclosure crisis.

He did, though, offer a different solution:

"To prevent foreclosures we must pay lenders or borrowers a lot of money or force lenders to modify loans even when they don't want to," the Fed researcher said. "The idea we can go forward and all we need to do is tweak things a little or change a rule here or there or even change a lot of rules and give some incentive payments -- that is not enough.

"If we want to prevent foreclosures, and that is a...political consideration, not really an economic consideration, then we know how to do it. In essence what I'm trained to say is we know how to prevent foreclosures. We just need to be prepared to spend the money and to decide who we think needs that money and who we think deserves help rather than trying to come up with some way we can do something for free helps all of the right people and punishes all the wrong people."

Read the full article at:

http://www.huffingtonpost.com/2010/10/25/fed-obama-hamp-foreclosures_n_773507.html


--------------------------------------------

[Better Believe It]

1. Foreclosure Mess Victims Cry Foul

Foreclosure Mess Victims Cry Foul
By Lita Epstein
October 28, 2010

Phyllis Caldwell of the U.S Department of Treasury, testified at the same hearing that, "The reported behavior of these mortgage servicers is unacceptable." She explained servicers must "certify to their foreclosure lawyers that all loss mitigation options have been exhausted" before they can proceed to foreclosure. This includes consideration of a short sale or a deed-in-lieu of foreclosure. The Treasury Department currently is in the process of reviewing the ten largest servicers' internal policies to be sure they are accurately completing the pre-foreclosure certification process.

Lawsuits take years to wind their way through the courts and several attempts are being made to certify these cases as class actions, which could mean thousands of homeowners not currently involved in filing cases could become part of a class. The net result will just stretch out the foreclosure mess for several years.

So what can be done to speed things up? Julia Gordon thinks it's time for Congress to pass legislation that would "meaningfully realign incentives among servicers, investors and homeowners." Key changes she advocated include: --Change the bankruptcy code to permit modifications of mortgages on principal reductions. Congress so far has failed to pass this type of legislation even though some members of Congress agree.

--Mandate loss mitigation prior to foreclosure. So far it's voluntary in most cases.
--Fund legal assistance for homeowners. Right now it differs state-by-state.
--Solve the problem of mortgage debt forgiveness without the tax structure. Homeowners need to be certain they won't be hit with a large tax bill if debt is forgiven.
--Neither Congress or the Administration is pushing for these types solutions. Instead loan modifications are coming to a screeching halt with only 28,000 people receiving permanent modifications in September, down from 33,000 in August. So it looks like with inaction by the Congress and the Administration, the only branch of government left to find a solution will be the courts.

Read the full article at:

http://www.housingwatch.com/2010/10/28/foreclosure-mess-victims-cry-foul/

[Better Believe It]

2. The purpose of HAMP is to give evicted homeowners a softer landing when they get kicked to the curb!

Obama: More Aggressive Anti-Foreclosure Efforts Would Help People Who Don't Deserve It
By Arthur Delaney
October 28, 2010

On Monday, a federal bailout watchdog reported that HAMP sometimes actually causes the foreclosures it's designed to prevent, as applicants "end up unnecessarily depleting their dwindling savings in an ultimately futile effort to obtain the sustainable relief promised by the program guidelines." It's an allegation that had already been made by homeowner advocates.

Obama is unfazed by all of that.

"Obama and other officials in his administration have ditched the three to four million number and now insist that the purpose of HAMP was to help the broader housing market and give doomed homeowners a softer landing when they are booted from their homes. Even HAMP borrowers in trial periods who are ultimately bounced from their homes, the administration argues, benefit from reduced monthly payments, which are typically $500 less than their normal amount.

One of the biggest changes to HAMP since it started last year has been the requirement that as of June, borrowers must prove their eligibility with documents like tax forms and pay stubs. The administration argues that many people were denied permanent modifications because they were put into trial plans before their ability to pay had been verified.

Obama pointed out that what's driving foreclosures nowadays is the jobs crisis, rather than predatory lending and exploding mortgages. "And so the single most important thing I can do for the housing market is actually improve economic growth as a whole," he said. "If we can get the economy moving stronger, if we can drive the unemployment rate down, that will have probably the biggest impact on foreclosures, as well as housing prices, as just about anything."

http://www.huffingtonpost.com/2010/10/28/obama-foreclosure-program-_n_775553.html

Now let's not hear any more talk about foreclosure moratoriums that will help deadbeat homeowners. BBI

[Better Believe It]

3. For weekend DU'ers