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As Administration Scrambles to Help Homeowners, Billions Left Unspent
With housing prices dropping sharply [1], and foreclosure filings against more than 1 million properties [2] in the first half of this year, the Obama administration is scrambling for ways to help homeowners.
A representative from Bank of America meets with homeowner Alysa Cerisier, right, to discuss mortgage modifications at a workshop on Aug. 25, 2011, in New York City. (Spencer Platt/Getty Images) One place they won't be looking: An estimated $30 billion from the bailout that was slated to help homeowners but is likely to remain unspent.
Of the $45.6 billion in Trouble Asset Relief Program funds meant to aid homeowners, the most recent numbers available show that only about $2 billion has actually gone out the door.
The low number reflects how little the government's home loan modification and other programs have actually helped homeowners [3] deal with the foreclosure crisis.
The programs have been marked by poor oversight [4] and consistent under-enrollment [5]. Homeowners have been forced to navigate an often bewildering maze at banks marked by slow communication, lost documents and other mistakes [6].
The amount of money spent is also low because the government pays out its incentive over a number of years. As of July, according to a Treasury spokeswoman, the government is on track to eventually spend $7.2 billion helping homeowners enrolled in its main loan modification program. That number doesn't factor in other homeowners who may enter the program before it ends in December 2012 -- but it does assume that all homeowners currently in the program will be able to continue making payments.
In November, the Congressional Budget Office lowered their estimate of the total amount of money the government would spend on its foreclosure relief programs from $22 billion to $12 billion. (The New York Times reported today that the government has "spent or pledged" $22.9 billion of the TARP money so far [7], a figure that that's dramatically higher than ours, and that the Treasury spokeswoman said was the Times' own number.)
According to the original TARP legislation, unused funds should be returned to the Treasury to and used to reduce the debt [8]. While Congress has the power to re-route those funds into new programs, Republicans seem unlikely to endorse such a plan [9].
An Obama administration's statement noted that they were continuing to look for ways to "ease the burden on struggling homeowners" through new proposals and re-considering old ones.
The other ideas the administration is looking at have received mixed reviews. Among them: turning foreclosed homes into rental properties [10] or allowing homeowners to refinance their mortgages at today's lower interest rates, an old idea that may not actually help a large new segment of homeowners [11].
"We have no plans to announce any major new initiatives at this time," the statement noted.
16 Comments so far
Show AllI am waiting for my lender to be registered with the Keep Your Home California program. It has taken a few months to navigate the process, but it looks like the California version of the program for hardest hit states in the recession is actually going to work to help me through a rough spot that finds me a few months behind on my primary which has gone into default. The program is supposed to bring me current next week (I hope) and that will be a huge help.
The author lost me at this part:
"the Obama administration is scrambling for ways to help homeowners."
Hmmmmmmmmm.
they are busy scrambling to get him re-elected and not to annoy big banks even a bit.
How about the Fed reserve giving US 0% interest loans rather than to the banks who buy Treasuries or gamble on WS.
The European stock markets have lost about 50% since their top in 2007. The Dow has only lost about 10%... That should tell you where part of the$16 TRILLION banks got went...
It didn't go to small business loans or homeowners. Indeed we need interests rates around 3-4% max on fixed rate loans plus a 1-2 % Fed subsidy for those paying over 30% of income on home loans for at least 10 years or significant income change.
AM I DREAMING? I wont get any of it from Obama whose chances of re-election should there be competition on the progressive side would amount to ZERO.
Trillions of our money for the thieving banks right away, but trickle a few billion to the ripped off people very slowly over the years. Meanwhile, give amnesty to the banks so they don't have to account for their biggest heist in human history. Re-election time!
HA!!
We are living on my twenty year old pension and SS. For the past few years there has been way too much month at the end of the money, so the credit cards got us through the month. Then, car repairs, vet bills, home maintenance all had to go on the cards. I've always scrimped and managed to pay my mortgage payments and a little better than the minimum on the cards.
When the banks got their trillion dollar bailout, I asked my banker if there was some way I could refinance, or something, to pay off the cc balance so we could have a chance of living on the pension.
When he finished laughing, he told me that the value of my home had dropped far below the mortgage value, so there was no way I could borrow on the house.
At about the same time, I got letters from all the card companies (two cards are issued by my bank) saying that times were hard so they had to raise their usurious interest rates even higher. That forced the minimum payment to more than I had been paying. That cost me a huge penalty for the first month until I figured out what the going rate was going to be.
I also found out the hard way that these various companies offering to negotiate lower mortgage terms are a bunch of bottom feeders sucking the life out of the poor and the elderly.
I have always paid my debts, on time, regardless of hardships. Finally I even looked into bankruptcy laws to see if I could get any relief that way.
Nope! The bought Congress set it up so that credit card debts are sacrosanct. I guess when you finally lose your home and are trying to live under a bridge, they probably seek you out and take the cat food, then charge a penalty on the balance owed.
I am well aware that my situation is not unique. There are probably close to a hundred million in the same boat, but all must go to the banksters and the corporations. Greed seems to always trump humanity these days.
I'm sorry this has happened to you....too; but I hope you're not going to start sniveling about all those irresponsible home owners that caused all of this.
Well that is a rude comment. First say you are sorry, then say don't start snivelling. No where was that even mentioned.
An estimated $30 billion from the bailout that was slated to help homeowners but is likely to remain unspent.
Until Obama can find a way to give it to Wall Street Banksters.
That's exactly what all the hype about paying down the debt and worrying about the deficit is all about.
"While Congress has the power to re-route those funds into new programs, Republicans seem unlikely to endorse such a plan [9]."
Barbarians at the gate
" or allowing homeowners to refinance their mortgages at today's lower interest rates, an old idea that may not actually help a large new segment of homeowners [11]".
It would certainly help me to go from 6.35% to 3% with 1% financed by the Government so that my monthly payment would fall around 33% of my income (what Barack promised on the campaign trail) but for that a law must FORCE the bank to give me that deal if I have been paying regularly and to anyone showing they can pay under the new rate.
I tried to summit an application thru the current program and although i meet the qualifications the bank said NO based on small technicalities. It has NO INTEREST in helping me: I have so much equity in the house they'd love to foreclose on me after 12 years of payments and a 20% down when I purchased....
The current program is optional and banks drag on and on asking for more info and more and more and constantly giving wrong info: I was patient.
Also, they can't call overseas (YES It's true) or write to you about what's missing - so don't plan a trip overseas...
crispy got it right on a couple of comments. The HAMP program was supposed to have two different kinds of loans available, but only one ever is offered by the banks - the one which (if you can qualify for it) still makes the most money for the banks and leaves homeowners with a still underwater mortgage. The other - which takes a real estate lawyer specializing in foreclosures to force the banks into - is a deal where the bank has to write down the balance of the loan to the present value of the house, taking a loss themselves (why they don't offer it) and giving you a loan at the prevailing rate of interest. Geithner essentially steered the program into this shape, since he is a bankster himself and will undoubtedly get a high-paying job with a bank when he leaves the administration.
The bottom line is that it is a set piece with the odds in favor of the banks, and all legal remedies obscured and unclear to the homeowner. After a year and a half of fighting this setup, a full year of paying HAMP monthly payments, I was informed that I was kicked out of the program. I could probably have fought it further - there were irregularities in the bank's handling of it - but after that long, I was (and still am) worn down by the stress to the point that I had to admit defeat, let foreclosure finish, take a 'cash for keys' deal and move out.
I can not say too strongly that the BS by the Obama administration is just that, and will not help much of anyone, except Obama if there are any fools who believe in him and will vote for him again. I can't and won't. I did in 2008 and look what has happened. If you believe anything hopeful he says, you are just setting yourself up for disappointment again.
Thank you for sharing your personal experience with the program. I have heard similar horror stories. You are so right that this administration is a complete hoax. I too made the mistake of voting for O'bomber- won't happen again, I promise you.
I am so sorry that you got caught in the toxic mess created by the banksters, and then put through the wringer trying to do the right thing, and hold on to your home. My turn is probably coming this year as the economy nose dives again.
Best of luck to you in turning things around.
That brought to mind what the bank did with me. They required a huge list of all expenses and income, all credit card statements (the most recent), copies of the title company's report, copy of my mortgage (they were carrying the mortgage), retirement documents for me and my wife etc., etc., etc.
Each page of every document had to be signed, initialed, and dated. and I finally brought it to the bank where they copied it and faxed it to the Star Chamber.
The next month, I received a letter saying my request was being evaluated, but that all of the documents had to be resubmitted, signed and currently dated.
With a sigh, I complied. Next month, the same thing. Finally, I talked with one of the clerks at the bank that I had gotten to know. I asked if this was the routine, to just keep me submitting the same thing over and over until I finally quit? Her answer was that that seemed to be the strategy.
I told her I guess I'd save us all a lot of time and paperwork, and to forget it. They did.
At the same time this was going on, the bank proudly announced that they had bought another bank! The clerk told me that they had been planning to buy one of the biggest casinos in Vegas, but were told that might not be wise at this time.
At least we know where the bailout went.
They are taking their good ol' time...hoping people will give up, die or move to another state..... or what ever. I really think the banks, the rich are doing this on purpose, just to gain as much property and land as they can.... to start their own county...countries.... Kings and Queens.... with the rest of us as serfs....
The solution is simple. NO INCUMBENTS, no matter what. In 2012, vote for NO INCUMBENTS and dump the DINOs and RINOs out of office in large numbers. Only by replacing the corrupt Congress people with new (and also corrupt) people can we hope to force a real change. Once they realize that people will reject them for bad actions, they will realize they have to go GOOD things to stay in office. In Wa. state, 100% our congress-criminals have voted their OWN POCKETBOOKS 100% of the time. Murray and Cantwell have to go as soon as possible. Both are DINOs (Democrats in name only) and corrupt. DUMP YOUR INCUMBENT at every level, local, state and federal, and do something nice for your kids!