Another day, another press conference from Treasury Secretary Henry Paulson to announce another addendum to the “Hope Now” initiative to save troubled borrowers. I have to say I came away from this one scratching my head a bit more than usual.
Today’s “Project Lifeline” (who names this stuff?) gives borrowers who are about to lose their homes thirty more days to try to work something out. My question is why did we need a press conference and a title to do something that lenders should probably be doing in the first place.
I’ve been hearing from a lot of folks on the front lines of so-called “modifications” and “workouts” that one of the biggest impediments to success is the sheer volume of people requesting help and the lack of resources and time. So now they get 30 more days. Ok.
But then I have this other problem, and that is the moral limit to all this. It seems like every day we hear about a new plan to “help” more borrowers stay in homes that are far above their economic means.
I was a little taken aback today when I put the question to the Secy. Paulson:
Me: Where in your mind is the moral limit to all this?
Paulson: We’ve never argued that this will help everyone or that it should. You’ve heard me describe the fast track modification process as a way to prevent a market failure.
Yep, in all that talk about saving the “silent suffering” the fact is, that this is a way to save the housing market and all the investors who bought into mortgage-backed securities.
I’m not arguing whether that’s right or wrong, I’d just like everyone to start saying what this actually is: a mortgage market that invented some dicey, dare I say, faulty products and a whole bunch of borrowers who bought into those products, some knowingly and some unknowingly, without choosing to look at all the “what ifs” involved.