Mounting Evidence That Obama's Administration Isn't Looking Out For Main Street
Remember the much touted Making Home Affordable plan, where the Obama team was going to pay to get banks to refi people’s mortgages? Well, big surprise, the bank’s are denying people right and left. (Remember, they have incentives to let people fall into foreclosure, and Obama and Congress did not vote to allow courts to restructure mortgages in bankruptcy.)
[via Frustrated Homeowners Turn to Media, Courts by Alexandra Andrews]
“Qualified homeowners are being routinely denied loan modifications through the Obama administration’s Making Home Affordable plan [1], but they have little recourse to correct the mistaken denials, housing advocates say. In the absence of an effective appeals process, some borrowers have improvised their own solutions: They turn to journalists or congressmen [2] – or take Treasury Secretary Timothy Geithner to court.
According to the government’s latest public figures, less than 12 percent [3], or roughly 360,000, of the borrowers projected to pass the program’s initial eligibility test [4] had received loan modifications by the end of August, about five months in. The process of reviewing those borrowers for final qualification has been “pretty haphazard,” according to Geoff Walsh of the National Consumer Law Center.
“People are wrongly denied all the time. Every day,” said Irwin Trauss, supervising attorney at Philadelphia Legal Assistance. “The lenders are generally applying the criteria incorrectly.”
Under the program, the government pays mortgage servicers to reduce borrowers’ payments. The servicers have signed contracts agreeing to abide by the government’s eligibility parameters, but the servicers determine whether a borrower meets them.
As we reported last month, when mistakes are made, it’s difficult – often impossible – for borrowers or housing counselors to catch them because servicers typically keep their calculations in the dark.
[…]
A spokeswoman for the Treasury Department said that, as of today, mortgage servicers will be required to report the basis for denial to both the government and the borrower. Freddie Mac has also begun auditing a sample of borrowers who were rejected, although it’s not clear when those results will be made public, she said.
Thompson said that “at a bare minimum,” there should be a number at Treasury or Freddie Mac where borrowers have access to an independent review of their denial, with the servicer bound to the outcome. The Treasury spokeswoman said that servicers have been asked to develop their own processes for dealing with borrower complaints.
In lieu of a formal appeals process, some frustrated borrowers have had success going to the media. Servicers often reverse their decisions when contacted by a journalist, said Guy Cecala, publisher of Inside Mortgage Finance. “
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Oh great. So the Treasury did not set up an appeals process, and is not obviously monitoring the project very closely. So it’s just window dressing, because it is failing to do what it was supposed to do.
Likewise, what ever happened to all those jobs that the stimulus was supposed to create, Mt President? Now your economic advisors are saying we are in for a long jobless recovery. Is that acceptable? Paul Krugman doesn’t think so:
[via Mission Not Accomplished]
Stocks are up. Ben Bernanke says that the recession is over. And I sense a growing willingness among movers and shakers to declare “Mission Accomplished” when it comes to fighting the slump. It’s time, I keep hearing, to shift our focus from economic stimulus to the budget deficit.
No, it isn’t. And the complacency now setting in over the state of the economy is both foolish and dangerous.
Yes, the Federal Reserve and the Obama administration have pulled us “back from the brink” — the title of a new paper by Christina Romer, who leads the Council of Economic Advisers. She argues convincingly that expansionary policy saved us from a possible replay of the Great Depression.
But while not having another depression is a good thing, all indications are that unless the government does much more than is currently planned to help the economy recover, the job market — a market in which there are currently six times as many people seeking work as there are jobs on offer — will remain terrible for years to come.”
Krugman makes a forceful case that a protracted period of joblessness at this level will have large long-term consequences, specifically from raising a large number of children in poverty. But don’t forget all the young people who cannot find work, and may drift to a marginal life of crime or grey market employment.
And getting back to the premises behind the stimulus: jobs were the whole point.
Once again, it seems Obama and company are fascinated with nation building and saber rattling in central Asia, and significantly less interested in the consequences of our economic partiality. The people need a bail-out more than GM and the banks.