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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 AllWe 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.
Barbarians at the gate
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.