Published on
by
Pro Publica

As Administration Scrambles to Help Homeowners, Billions Left Unspent

by
Lois Beckett

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)

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.

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.

FRIENDS: Help Us Fight

Independent journalism has become the last firewall against government and corporate lies. Yet, with frightening regularity, independent media sources are losing funding, closing down or being blacked out by Google and Facebook. Never before has independent media been more endangered. If you believe in Common Dreams, if you believe in people-powered independent media, please support us now and help us fight—with truths—against the lies that would smother our democracy. Please help keep Common Dreams alive and growing. Thank you. -- Craig Brown, Co-founder

Support Common DreamsSupport Common Dreams

Share This Article

More in: