Bush Official: Mortgage Aid Not Working
Housing and Urban Development Secretary Admits Failure Of Efforts To Prevent Foreclosures
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Two programs aimed at helping homeowners avoid foreclosure have had little effect, Housing and Urban Development Secretary Steve Preston acknowledged Nov. 19. One program will be scrapped, the other revised. (AP / file)
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Play CBS Video Video Losing The Foreclosure War FDIC Chairwoman Sheila Bair unveiled a proposal that would attack the foreclosure crisis at its core by keeping at-risk homeowners in their homes and extending payoff terms. Anthony Mason reports.
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Video Homeowners Cry For Help Last month, more than 279,000 households received a foreclosure notice. And, as Ben Tracy reports, there's a fine line between those who are clinging to their homes and those who've already lost them.
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Video Ways To Avoid Foreclosure It can cost the bank much more to foreclose than renegotiate terms, which is what some banks are doing. Harry Smith gets a detailed explanation from Joanne Lipman from Portfolio magazine.
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In-Depth Q&A: Mortgage Help New plan to allow lenders to alter delinquent loans more quickly.
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Do you qualify for a more affordable government-backed mortgage? Get facts on the new mortgage relief plan.
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.
The response has not kept up with the need. Many Americans who should be getting help are not getting help.
Housing and Urban Development Secretary Steve PrestonEven 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.
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See all 109 CommentsPosted 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.
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.
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?
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.
The only thing isn''t fake is
THE SECOND GREAT DEPRESSION.
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 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!!
The real solution to all this mess of deadbeats not honoring their obligations is to lower 30 year fixed interest rates to 2% based upon credit score. Those with the best score can get a loan for 2%. Deadbeats who have taken advantage of the system or who knowingly took loans that they knew they couldn%u2019t afford to pay back will have a poorer credit score yet can still get a loan at a higher rate. People who have proven they can read a loan doc and are responsible enough to pay their debts can buy up all this vacant housing and rent it back, unlocking this mess that %u201CYou the deadbeat looser%u201D has created.
Stop rewarding individuals for making a bad decision and stop blaming others for YOUR mistakes.
There is plenty of money pout there to loan to people who have a history of paying it back. There simply needs to be a reason for them to want to take out a loan.
Hopefully the trials for genocide and crimes against humanity will be next.
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Posted by lancearmstng
I''m sorry, you''re not a maggot. Maggots don''t make noise. You''re.... something else.
I find it incredibly amusing, though, that you would present into this forum the idea that ''trickle-down economics'' will work during a conversation about this crisis that is nothing more than the end result of that very plan. You''re very confused, and noisy.
Read Naomi Klein''s THE SHOCK DOCTRINE: THE RISE OF DISATER CAPITALISM.
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See all 109 Comments