A Big Home on the Beach
“U. S. Will Push Mortgage Firms to Reduce More Loan Payments” from the New Youk Times by Peter S. Goodman
The Obama administration on Monday plans to announce a campaign to pressure mortgage companies to reduce payments for many more troubled homeowners, as evidence mounts that a $75 billion taxpayer-financed effort aimed at stemming foreclosures is foundering.
“The banks are not doing a good enough job,” Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview Friday. “Some of the firms ought to be embarrassed, and they will be.”
Some of the firms will be embarrassed? Some banks will be embarrassed? Because they turned down loans or loan mods? Is Barr serious? What planet is he living on? As far as I can tell, it is the banks job to turn down loans.
Even as lenders have in recent months accelerated the pace at which they are reducing mortgage payments for borrowers, a vast majority of loans modified through the program remain in a trial stage lasting up to five months, and only a tiny fraction have been made permanent.
Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments.
Barr will try to use shame as a corrective? He will publicly name those institutions that move too slowly? And he thinks they will be embarrassed? More like they will slap each other on the back in congratulations. Are thieves and con men embarrassed by their crimes? Especially when they get away with them?
“They’re not getting a penny from the federal government until they move forward,” Mr. Barr said.
Yeah. Right. Dude, who do you think owns the Federal Reserve? Literally owns the stock? I’ll give you a hint. It ain’t you and me and it ain’t the federal government.
Last month, an oversight panel created by Congress reported that fewer than 2,000 of the 500,000 loan modifications then in progress had become permanent under Making Home Affordable. When the Treasury releases new numbers next month, it is expected to report a disappointingly small number of permanent loan modifications, with estimates in the tens of thousands out of the more than 650,000 borrowers now in the program.
Let me give you a clue Mr. Barr. FORECLOSURES ARE THE SOLUTION. GOVERNMENT IS THE PROBLEM. So far the government has spent $75 billion on this program, and maybe 50,000 loans have been permanently modified? That comes out to $1,500,000 per loan modification. You think I am exaggerating? Do the math. And the federal government has spent hundreds of billions on bank bailouts. And the Federal Reserve has bought trillions of agency debt, toxic mortgage related assets, and treasuries to finance bailouts, swaps, and who knows what else. The government could have paid off every mortgage in the United States for half of what it is spending on solving the “foreclosure problem”. I guess they think paying off everyone’s mortgage would be a moral hazard.
timm eubanks
November 29th, 2009
C’mon down… we’re givin’ em away!
no_vaseline
November 29th, 2009
They dedicated 75b, did they actually spend it?
cdcrez
November 30th, 2009
@no_vaseline
Serious? When has a government program not spent whatever was allocated to it? And more than? Use whatever number you want as spent and whatever number you want as permanent modifications and tell us how it works out. This is just another socialist program designed to enrich those in power at the expense of the taxpayers, as are all socialist programs.
no_vaseline
November 30th, 2009
Yeah I’m serious, and you’d be suprised how dead wrong you are. The NY Times had an article yesterday on food stamps. Of eligible people in California, only 50% take them. In OC the number (if I remember) is less than 5%.
In this case, the government was going to pay $1000 to get the lender to modify the mortgage and $1000 a year for I think three years. If they did 2000 mortgages that’s 2,000,000 – only 74,800,000,000 shy of the budgeted target.
This might be a socialist program, but it’s not working, and it requres somebody to use it to tap the funds. And that’s why I’m asking the question you are evading-
Did they actually spend it, and on what?
cdcrez
November 30th, 2009
I can not answer that question. And neither can you. And of course they will spend it. That is what they do. And of course it is not working if it is a socialist program. Socialist programs are not designed to work. They are designed to get votes and pay off campaign contributors.
cdcrez
November 30th, 2009
The number of food stamp recipients has climbed by about 10 million over the past two years, resulting in a program that now feeds 1 in 8 Americans and nearly 1 in 4 children.
Here is the link to The New York Times article, since you seem to be so fond of quoting The New York Times. Why did you leave out the portion of the article pointing to LA as being an anomaly to the heavy usage of food stamps?
no_vaseline
November 30th, 2009
I think I got my math wrong there.
75,000,000,000 – 2,000,000 = 74,998,000,000,000.
The object was to save half a million homes. I think they missed. Also, here are some additonal cites.
http://www.nytimes.com/2009/11/29/business/economy/29modify.html?_r=1
[quote]Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments.[b] The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments.
“They’re not getting a penny from the federal government until they move forward,” Mr. Barr said.[/b]
From its inception early this year, the Obama administration’s program, called Making Home Affordable, has been dogged by persistent questions about whether it could diminish a swelling wave of foreclosures. Some economists argued that the plan was built for last year’s problem — exotic mortgages whose payments increased — and not for the current menace of soaring joblessness. Lawyers who defend homeowners against foreclosure maintained that mortgage companies collect lucrative fees from long-term delinquency, undercutting their incentive to lower payments to affordable levels.
Last month, an oversight panel created by Congress reported that [b]fewer than 2,000 of the 500,000 loan modifications then in progress had become permanent under Making Home Affordable.[/b] [/quote]
cdcrez
November 30th, 2009
The correct math is the government will waste every dollar it gets.
The correct math is the government is trying to correct a problem by throwing money at it.
The problem is not foreclosures.
The problem is debt.
The answer to to foreclose expeditiously.
The answer is to let the banks go bankrupt and out of business.
The answer is for the government to only spend what it has.
The answer is to end fractional banking.
The math becomes very simple.
no_vaseline
November 30th, 2009
Darn it. I’m getting over a virus and my head is pickled. Sorry for the typos on the math, but you get the idea.
C Delroy Spuckler
November 30th, 2009
I like using shame as an incentive for a publicly traded corporation to make numerous decisions which aren’t in their shareholder’s best interest.
I would love to see them publish this “shame list” and see their stocks pop on the news.
no_vaseline
November 30th, 2009
I disagree. All this “extend and pretend” BS does is change the timeline (shape), but not the magnitude, of the correction. But that ignores my base point – you wrote the government has spent 75 billion on this program, and your contention is hogwash.
They have done no such thing (not to any meaningful effect), and they never will, because there is no government program they can institute that will ‘fix’ the problem without creating the anarchy in the streets you Austrian School zelots so dearly crave.
Maybe you’re praying for the wrong thing. :/
no_vaseline
November 30th, 2009
@C Delroy Spuckler
Since the government owns them, why not? Ask the shareholders of Fannie and Freddie how that whole ‘dual mandate’ deal worked out for them.