Obama Administration Defends Housing Bailout
The Obama Administration is vigorously defending its mortgage bailout programs, from the Home Affordable Modification Program (HAMP) to the Neighborhood Stabilization Program to the FHA Short Refi.
They've taken to the blogosphere, the reporter conference call and to a hearing room in the House of Representatives, where Republicans are bent on scrapping it all.
Interestingly, the Administration also released the "Monthly Scorecard" for the programs today. The HAMP in particular offered some pretty lackluster results. While totals continue to rise, the number of trial and permanent modifications made in January were fewer than the number made in December. New volume has been falling steadily.
Neil Barofsky, the Special Inspector General for the TARP, opened today's hearing with strong criticism of the Treasury's transparency, or lack thereof, in reporting the number of borrowers who can be helped. He called it "disturbing," "shameful," and "inexplicable."
When the vote to abolish these programs was announced last week, and Administration spokesperson blasted, "If enacted, this legislation would close the door to struggling homeowners seeking relief in the face of the worst housing crisis in generations."
FHA Commissioner David Stevens, who unfortunately had to answer for the Treasury, wouldn't opine as to whether the government's mortgage bailout programs were successful, but did admit, "the HAMP numbers have not been what they were originally forecast. We are clearly concerned." But he added that proprietary modifications by the big banks, while more abundant than HAMP mods, don't reduce payments as much and have higher re-default rates.
Last week I was in Portland, OR at a Wells Fargo modification event.
The organizers had sent over three thousand letters to troubled Wells Fargo borrowers and received about 300 RSVPs.
Fewer than 300 showed up.
I was told that they usually have between a five and seven percent response rate. There were at least 100 Wells agents sitting at booths, waiting to work; many of them twiddling their thumbs.
The excuse? I was told many borrowers think these events are a scam.
Reality? Many are either gone already or don't want to go through a modification on a loan that is worth more than the home. They know they've got at least a year before any sheriff comes knocking.