Posts Tagged ‘congressional oversight panel’

HAMP Still Not Making The Grade: Geithner Refuses To Consider Alternatives

By almost every measure, the HAMP program continues to underperform in its effort to address the problem of mortgage foreclosures. Since its inception a year and half ago, only 340,000 homeowners have received permanent modifications and 436,000 have been dropped from the program. Last month alone, 155,000 homeowners were kicked out of trial modifications as opposed to only 30,000 who received new trial modifications. Accordingly, it appears the HAMP program is helping fewer and fewer homeowners as time goes on.

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Shocking News: Banks Fight Against Principle Write-Downs

shocked

During Congressional  hearings last week, the heads of several big banks, chief among them, David Lowman of JPMorgan Chase,  argued strongly against writing down principle balances. In a line all too often spouted by the executives of the very firms responsible for the current crisis, Mr. Lowman stated that principle reductions would invite homeowners to spend more than they could afford and raise the cost of financing for future homeowners.

The House had convened this hearing to discuss the Administration’s latest efforts to put a tourniquet on the hemorrhaging housing market by coaxing lenders to write down mortgage balances.  According to the latest Congressional Oversight Panel report, one in four mortgages are underwater.  Apparently, despite all of the incentives Treasury is throwing their way, the banks remain unwilling.  

It is time to stop coddling the banks and get serious about addressing the foreclosure crisis.  There is a way that would give the government’s loan modification program the teeth it needs to make the banks cooperate and it won’t cost the taxpayer another dime. Amend the bankruptcy laws to allow judges to modify mortgages on primary residences.

Warren Report Finds Administration’s Foreclosure Mitigation Efforts Still Lagging Behind

The Congressional Oversight Panel, headed by Elizabeth Warren released its report regarding the state of the foreclosure crisis and the Administration’s efforts to address it yesterday. The report concluded that while the Treasury had made significant efforts to improve foreclosure mitigation programs like HAMP, its efforts are still not keeping pace with the scope of the crisis.

It found that 2.8 million homeowners received foreclosure notices in 2009 alone and one in four mortgages are underwater, meaning the home’s value is less than the mortgage. As for modifications, there have been 168,708 permanent modifications completed as of February 2010. What this comes out to is that for every family who received a permanent modification, ten families lost their homes.

The panel commends Treasury for the improvements to the program done to date, including addressing foreclosures due to unemployment and the negative equity (underwater mortgages) situation. At the same time it urges Treasury to act more quickly, since it is clear that current efforts are coming too late to help the majority of distressed homeowners.

The panel also expressed concerns that by continuing to offer the servicers and lenders more incentives in bits and pieces, that Treasury may be encouraging them to delay modifications in the hopes that larger incentives will be available later.

So, basically, Warren and the COP have found that the Administration’s efforts to stem the foreclosure crisis have been too little and too late given the magnitude of the crisis. To underscore that, let me leave you with one more number out of that report: currently, there are 6 million homeowners who are 60 days or more delinquent on their mortgages.

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