Image via WikipediaMillions Of Homeowners Are Floundering, Market in Freefall
From Denny: President Obama rolled out yet another homeowners program aimed at propping up the housing market and therefore the economy. It's doomed to fail as well as the other recent two programs that were rife with crooks administering them.
This program is tailored for homeowners who are underwater on their mortgages, supposedly eliminating obstacles and creating a faster track to get refinanced. It's the revised retooled version of HARP (The Home Affordable Refinance Program) that failed so miserably two years ago.
People who owe more than their homes are worth, due to the colossal meltdown of foreclosures by the millions in just the past two years, might be able to refinance less expensive payments. It is supposed to help lower some transaction costs and fees, getting maybe a lower rate for their mortgage. It might only help up to 250,000 homeowners, not the projected four million.
In the past two years as the President has tried to address the housing crisis mess there have only been about 894,000 homeowners helped. The original target was to help five million. As it is the projections are only up to another one million might be able to qualify yet far less than that will be helped when it's all said and done. What these programs claim to do and what actually happens are at opposite ends of the spectrum.
This latest effort of retooling a previous program still does not address the millions of foreclosed homes flooding the housing market and driving down prices. Those ever descending home prices are forcing those who are not in foreclosure to realize their middle class savings account is dwindling fast, with virtually nothing left for retirement funds.
Middle class America purchased houses in the hopes of maintaining a hedge against inflation and a crooked stock market only to find the Big Banks have screwed them over yet again. The White House holds to the belief this new refinancing program will help stabilize the housing market. How?
It does not address the glut of current foreclosed properties. It does not address the millions in foreclosure process right now. For every home in foreclosure this moment there are another 50 standing in line behind it. Does anyone smell housing market implosion?
EHLP
The last plan the President rolled out in July sounded great for distressed homeowners: Emergency Homeowners Loan Program. It read like a dream for the distressed homeowner. To qualify was easy: you could be unemployed or under employed, had to make less than $75,000 a year. A homeowner could qualify for up to $50,000 in payments or two years to get caught up.
How could such a sweet deal go wrong? I saw that plan this summer and decided to wait to see how it played out in the news. Nothing is ever as simple or as direct as it is supposed to be and this bad program was no different. The previous loan program was a mess as far as qualifying and this one proved no better.
What started in July ended up paying out only partial funds in September. The fund for this program was $1 billion. They did not pay out all of the funds, instead returning almost half back to the Treasury. Does something sound wrong here? You bet.
Private contractors are the problem standing in the way of distressed homeowners
Here's where the President keeps going wrong: The private contractors who administer these programs are complete crooks. They were put on during the Bush administration so you can guess what low caliber of businesses they are.
Obama keeps trying to work with Bush era cronies and wonders why his programs keep getting torpedoed and screwed up beyond repair. Case in point: MMI (Money Management International) helped administer the EHLP program this summer. The word is they turned down thousands of people who qualified.
What's wrong with MMI? Plenty, and HUD needs to investigate vigorously and thoroughly. The word is the lawsuits are flying. Apparently, MMI is no fan of anyone of Hispanic origin, even if they have been Americans for a century. People are furious over this bias against ethnicity.
Here in Louisiana the Spanish owned this state before it became part of America about 200 years ago. There are families that go back that far, native born for generations yet they could not qualify according to MMI? Sounds suspicious.
In the last emergency homeowners program (the original version of HARP) the mortgage companies and the banks were administering it, also private contractors. In this EHLP program there are private contractors, many are credit counseling services, administering it.
Why did this go so wrong?
Well, for one thing these companies look out for themselves. These private contractors get paid by how many homeowners they process, not how many they recommend to HUD to receive the funds. They make a lot of promises to the homeowners they never make good.
There is also no process for homeowners to take their grievances anywhere up the food chain when they start realizing they have been played. Why is that? Are these programs just political posturing or really meant to help homeowners?
Companies like MMI make money by switching homeowners to purchasing their credit counseling services. Even though they are not allowed by law to do so they did approach homeowners. Even though it is illegal to badger someone about their ethnicity, demanding to know it, they did it.
The word is MMI held desperate homeowners virtually hostage collecting a lot of information that is irrelevant to the task and illegal. Sure looks like data mining they planned to resell later. So, for openers have they violated federal and state privacy laws? Only a proper investigation will bear that out.
Federal programs encouraging greed of private contractors
The manner in which these programs are set up cause them to fail. All they do is encourage the mortgage companies like Fannie Mae and the Big Banks to take the funds to catch up homeowners and then they foreclose anyway. I've heard story after story to bear out that scenario.
Here in Louisiana it is common for a homeowner to get caught up on payments, continue making payments just fine and the bank forecloses anyway. How legal is that? Again, sounds suspicious.
Of course, in many states, just like here in Louisiana, there are those local sheriff departments full of crooks. They get together with Fannie Mae, the mortgage company and the appraiser to lower the value of the auctioned home down to the level a deputy sheriff can afford to purchase it. It's a neat little package where the feds don't know how the homeowners are getting cheated.
The government plays into the greed of the banks by ensuring them the federal government will make sure they don't lose any money on the properties. The government plays into the greed of the private contractors by unknowingly paying them to harass desperate homeowners who think their government will actually help them. The mortgage companies refuse to work with the homeowners because of corruption like these sheriff sales across the country - and the fact that the government guarantees potential loss.
In short, the banks and mortgage companies are not motivated to work with the homeowners no matter how great the federal programs they keep rolling out. What they are motivated to do is take the taxpayer money and plunk it down onto their profit line. Why should the mortgage companies and banks wait to get their money from the homeowner paying off his mortgage when they can get it sooner from the federal government?
It's time the President get hard charging and investigate - in a very public manner - all these wrongdoings from the private contractors, the mortgage companies and the banks. If not, it will only give more fodder to the Occupy Wall Street protests where 86 percent of America agrees with them.
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