Making Home Affordable or Just Pushing More Paper?

Thursday, January 28, 2010 , , 3 Comments

I was going to take some time to write a nice thoughtful post about Bernanke's second term but I decided that the money-printing prick has had way too much facetime on JDA lately and frankly I'd be happy not seeing his neck beard at all for another 4 years.

CNN Money:

Under fire for the low number of people receiving long-term mortgage help, the Treasury Department on Thursday announced new guidelines that will require applicants to provide all paperwork before getting a trial modification.

The new policy will make it harder for troubled homeowners to start the process, but it should make it easier for them to qualify for permanent assistance under President's Obama foreclosure prevention plan.

The administration's $75 billion housing effort has been plagued by paperwork problems since it launched last April.

Borrowers complain that their loan servicers constantly ask for additional documents and lose their forms. Servicers, meanwhile, say that borrowers are not handing in all that's needed.

The new rules, which start June 1, will effectively shift the paperwork burden to the start of the process.

"They aim to make it easier and quicker to provide permanent modifications," said Treasury Assistant Secretary Herb Allison. "These changes also will enable servicers to process more efficiently and handle more volume effectively so we can help more people more rapidly."

Distressed borrowers will have to fill out a three-page request form that asks them to explain their hardship and list their income and expenses. They will also have to sign an IRS 4506-T form that allows servicers to pull their tax returns. Both forms are available on the Making Home Affordable program's Web site.

Yay, more bureaucratic paperwork under the guise of "help"! That's awesome!

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


Anonymous said...

I don't think this has much chance of working for any meaningful number of people. If housing tracker . net is to be believed, the medain asking price for a house in almost all markets has dropped substantially. Comps used in a standard appraisal have no chance of supporting the loan value. As a lender and investor, you would have to just put on blinders. Using SF as an example, May 06 the median asking price was over $668k. Today, it is $450k (which is an amount that still takes my breath away). Without significant reductions to the amount owed, for many people this is asking them to sign up for a lifetime of debt servitude. If they allow reductions, prudent people will cry to high heaven about the unfair treatment. If they don't somebody's going down. Tit, meet wringer. There used to be such a thing among people called "mortgage burning parties" when people would get together and have drink or two and celebrate some lucky person getting out from under the "rock" and owning their place lock, stock and barrel. Now, not so much (or as much as I've heard). People are/will looking / look back on this time period and stop glorifying going into hock.

My suggestion - change course on the bankruptcy rules within a window of time, allow people to file bankruptcy after being scrutinized, where the debtor can prove up sufficient income to pay something after imposing an "austerity budget" upon them allow the judge to "cram down" the value of the claim, move on. Not by any means a perfect solution but where we are today, what is?

Anonymous said...

here's some flatland news if you want to read it:

Anonymous said...

some more flatland news from our cross state rivals at the Star.

Remember, according your Superhero BB just a few years ago, there was no nationwide housing bubble.

too lazy to do the linky thingy today.