The Treasury Plans to "Encourage" More Help for Homeowners
Now perhaps I'm being a bit of a skeptic but based upon past performance, I have to admit that I'm not holding out for this latest scheme to amount to anything useful. But maybe that's just me.
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.”
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.
I am no expert on the process of a loan modification but I have had all four wisdom teeth removed (two by oral surgery and once involving a concoction that had to be 3 parts lidocaine and two parts cocaine/LSD/rubbing alcohol) and I imagine the two experiences are quite similar. In fact, from what I've heard, I'll take the 6 inch lidocaine needle and giant tooth-ripping claw in my jaw over a loan modification any day of the week.
Sorry if you're stuck in your home, underwater, and about to get foreclosed on, but here's some good news from the administration, they've officially extended the easy money for new homebuyers. It seems we will never learn our lesson and are simply sitting around hoping somehow this gets fixed.
Remax tells us (gee, wonder what their incentive might be to cover this?):
President Obama signed the legislation on Friday that extends and expands the U.S. tax credit for homebuyers. “It was the right thing to do – it will help millions of families achieve homeownership for the first time,” explains Liniger who actively worked for adoption of the new legislation by Congress. “The new tax credit will also go beyond first-time homebuyers and help current homeowners who want to move up, or need to downsize.” Earlier this week, both the Senate and the House overwhelmingly passed the Dodd-Lieberman-Isakson Amendment to extend and expand the homebuyer tax credit that was set to expire Nov.
“Normally, I wouldn’t favor such government involvement in real estate,” Liniger says. “But our economy and housing market remain fragile and we can’t afford to slip back into recession now.” He concluded, “This will have a significant impact on the real estate industry.” Liniger was joined by other real estate leaders, including NAR President Charles McMillan, in thanking Congress for the swift to put the new homebuyer tax credit in place before the earlier enacted First-Time Homebuyer tax credit expires at the end of November.
Yes, the significant impact is that realtors still have jobs. Were it not for a little clever intervention by our friends in Washington, the realtors might be the first ones with the flaming pitchforks. Meanwhile, how about those loan mods?
In October 2008, JPMorgan Chase & Co. shaved 25% off Rick Mullen's mortgage payment by lowering his interest rate, helping him to stay in his Valencia home despite a downturn in his small business refurbishing large shipments of damaged shoes.
More than a year later, Mullen is grateful but frustrated, he says, because Chase has repeatedly lost his paperwork and never finalized what was supposed to be a three-month trial loan modification.
"I've talked to them at least 50 times, and it's always the same: . . . 'Oh, we're missing some documents, your modification is at risk,' " Mullen said. "How long are they going to keep me hanging?"
Loan-modification limbo is of high concern these days, not only to borrowers like Mullen but also to economists, consumer advocates and government officials pondering the fact that 1 in 7 U.S. mortgages is in foreclosure or past due.
JP Morgan Chase, you ought to be ashamed of yourselves. Why are you getting the pat on the head by the administration if you aren't actually doing anything?
Keep belting out that rally cry, OMGObama. It's working beautifully, obviously.
If anyone has actual loan mod numbers to share, do let me know. 1% is being a bit optimistic from where I'm standing but that's because I haven't read my JPM propaganda for the day.