Bush Official: Mortgage Aid Not Working

(CBS/AP)  Two government programs designed to help hundreds of thousands of delinquent borrowers avoid foreclosure are having negligible effects, a top Bush administration official acknowledged Wednesday. One program will be revamped immediately, and the other possibly in the near future.

Steve Preston, secretary of Housing and Urban Development, said both private industry and government efforts have fallen short as the foreclosure crisis has exceeded all but the most dire forecasts.

"The response has not kept up with the need," Preston said in a speech the National Press Club. "Many Americans who should be getting help are not getting help."

The "FHASecure" program announced in August 2007 has only assisted about 4,000 delinquent borrowers and "has really not met the need," Preston said.

The other, called "Hope for Homeowners," has received just 111 applications from distressed homeowners since it was launched Oct. 1.

"Few lenders have actually signed up, and few borrowers are submitting applications," Preston said. "So clearly we needed to make meaningful changes."

Some experts have been skeptical of the efforts to curb foreclosures all along, saying they are too slow and reach too few homeowners, as CBS News correspondent Ben Tracy reported last week.

"It's like having a boat full of water that is leaking all the time and each one of these programs is like giving someone a cup to bail it out," Guy Cecala of Inside Mortgage Finance told CBS News. "We need to be using buckets."

The HUD chief outlined changes intended to encourage more participation in the Hope for Homeowners program, which refinances cash-strapped borrowers into new government-backed mortgages.

He also said that housing officials are reviewing whether additional changes to FHASecure might help that program gain traction.

Last week, hundreds of lenders gave HUD officials an earful of criticism about the Hope for Homeowners program. They blamed drawbacks in the program's original design for their lack of participation. Among their complaints: lenders were required to absorb large losses on the delinquent loans.

Under the new rules, lenders would be allowed to take a smaller loss. New loans can be made for 96.5 percent of the home's current value, rather than the previous level of 90 percent.

Even with the changes, borrowers would still have to pay back half of any appreciation back to the government if they sell their house or refinance.

The new guidelines only apply to borrowers who are spending up to 31 percent of their pretax income on their home loans. Borrowers who are spending a larger share of their incomes are required to have at least 10 percent in home equity.

Preston also said that lenders who hold home equity loans or other second mortgages must not block the transaction, but will receive an small payment and a share of any eventual appreciation in return for doing so.

In addition, lenders will be allowed to create new 40-year mortgages, rather than the traditional 30-year term, which will lower the borrowers' monthly payments but cost them more in interest over the life of the loan.

Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, called the changes "very helpful steps and reflect a commitment to meeting the need for more aggressive action to diminish foreclosures."

However, consumer advocate John Taylor of the National Community Reinvestment Coalition said the changes "offer sweeteners for the lender and nothing for the homeowner."

Preston did not release updated projections of how many homeowners are expected to participate, but officials hope the new guidelines will help the program reach its original estimate of helping 400,000 distressed borrowers over the next three years.

[harbinger09]

Most people who are defaulting cannot afford their mortgage. Many have lost their jobs. No matter how restructured, people on unemployment or who can''''t afford food/gas AND a mortgage will not be helped--they don''''t apply--because they are beyond the help restructuring loans can do--it is more than the mortgage--the high inflation in our country means they can''''t afford food. gas, services, healthcare AND a mortgage--our food/gas rose over 400% since 2001.

Posted by harbinger09 at 03:49 AM : Nov 21, 2008


and we have high inflation because our country is continually borrowing (daily) for a war and recovery bailouts--money that we don''t have.

We are in a vicious circle--and the consumers can''t bail us out--because the consumer is also the people whose jobs are outsourced, downsized, or insourced and so--they are either out of work or scared--then there are the lenders--who are keeping the bailout money to save their most favored employees--debts be d@mned.

[harbinger09]

Maybe if more time was spent educating people who need help about these programs, they would take advantage of them. No one knows about these programs that is why they aren''''''''t using them.

Posted by redbds at 03:16 PM : Nov 20, 2008

Oh PLEASE! Then it would ONLY be ANOTHER of a NEVER ENDING LIST of excuses why it doesn''''t work.... after 8 years of excuse''''s and blame all of us should know this by now!!

Posted by Irmcvet97 at 03:30 PM : Nov 20, 2008


Most people who are defaulting cannot afford their mortgage. Many have lost their jobs. No matter how restructured, people on unemployment or who can''t afford food/gas AND a mortgage will not be helped--they don''t apply--because they are beyond the help restructuring loans can do--it is more than the mortgage--the high inflation in our country means they can''t afford food. gas, services, healthcare AND a mortgage--our food/gas rose over 400% since 2001.

[harbinger09]

With the Internet, we can mobilize many, many people. Pick a representative of the people (I would do it) and say something like: if the Congress does not provide a trillion dollars in aid (by seizing the personal assets of the corporate criminals) to small business, working folks and the middle class by December 15th, we will strike.

Posted by noloyalisti at 03:55 PM : Nov 20, 2008


EVERY SINGLE DOLLAR-- for bailouts or wars right now--we have to borrow--every single day. We don''t just print money--we have to have other countries buy or back our money by buying bonds.

When they buy our bonds, since they are not backed by anything real (just our promise of being able to pay with our labor in the future) the dollar devalues.

When the dollar devalues, inflation increases.

When inflation increases, things cost a lot more.

When things cost more, companies and people default on mortgages and loans

When that happens, companies eventually close down and people get laid off

When people get laid off, they can''t keep the economy going.

When they can''t do that, more people get laid off.

When more people get laid off, Congress makes more bailouts--then it starts all over again.

Are you learning yet?

[harbinger09]

"It''s like having a boat full of water that is leaking all the time and each one of these programs is like giving someone a cup to bail it out," Guy Cecala of Inside Mortgage Finance told CBS News. "We need to be using buckets."

NO FOOL. You need to patching up the holes in the boat, trying to bail out the ocean is like trying to sweep waves back into the sea--it is NEVER-FVCKING-ENDING. Work smart not hard--fix the root cause instead of the standard, reactionary patch and band-aid. The only one to benefit from the band aid appraioch is the doctor and the bandage companies.

This is the main problem with our government- short sighted and NO COMMON SENSE. bailouts alone will not work this time.

[niceface19]

Every thing in the US is fake, most women wear fake boobs, most men needs Viagra to have faked s.e.x, Government fak prosperity, keep saying the economy is strong bit it is faked, banks issues fake credits to fake well-to-do people who has fake credit.................every thing is fake.

The only thing isn''t fake is

THE SECOND GREAT DEPRESSION.

[niceface19]

if they''re greedy they can''t blame it on dumbo Bush.

[noloyalisti]

We need to have MILLIONS of Americans, who have since been complicit in the creation of the fascist government be ready to strike.

With the Internet, we can mobilize many, many people. Pick a representative of the people (I would do it) and say something like: if the Congress does not provide a trillion dollars in aid (by seizing the personal assets of the corporate criminals) to small business, working folks and the middle class by December 15th, we will strike.

[noloyalisti]

Well yeah, Bushoccio. This was a corporate fascist scam from the get go. Time for us to general strike and take it down unless the rich right wing CEO elitists give back their illegal money.

[noloyalisti]

Well yeah, Bushoccio. This was a corporate fascist scam from the get go. Time for us to general strike and take it down unless the rich right wing CEO elitists give back their illegal money.

[variant_530]

noloyalisti - How do you plan on striking in a way that will have an effect. Your kind has already tried sticking it to the "Man" by walking away from their mortgages. Got any other bright ideas?