HAMP Not Working, And Big Brother Knows It
By Kurt O'Keefe, Detroit Consumer Attorney on Feb 4, 2010 in Mortgage Modification
I am not the only blogger who bemoans the Administration’s feeble foreclosure prevention program.
The Huffington Post has an excellent story on the failure of HAMP, due to not getting the mortgage companies to voluntarily reduce the principal balances.
That is, to agree to lower the total amount owed on a house.
What happened is, the mortgage companies took their foot off the gas last year when judicial mortgage modification was before Congress. Once they defeated that in the Senate, it was back to business as usual.
Sure, they told the politicians, hey, no need to force us, that would mess up the mortgage market, and, besides, we are fixing the problem ourselves.
Watch that moral hazard, letting people off the hook for the amount they agreed to pay for a house just because it went down in value.
Well, I am not sure how much money is left in the moral hazard account, after the trillions spent guaranteeing and bailing out the mortgage companies who did, after all, make hundreds of thousands of bad loans.
Many people tell me, they do everything the mortgage company asks under the HAMP program, only to have the rug pulled out from under them.
MSNBC tells the story of one such couple, who ended up owing MORE on their mortgage, $20,000 more.
As opposed to a principal reduction, that would have reduced everyone’s losses.
Even the investors in the securitized trusts that actually own the mortgages have figure it out.
Quoting from Shahien Nasiripour’s piece in the Huffington Post,
” . . . .Micah Green, a partner at Patton Boggs LLP, a Washington law firm that represents a mortgage-investor group of asset managers who hold more than $100 billion in residential mortgage-backed securities.
Without principal reductions, “there is a growing realization within the administration and on Capitol Hill that it’s very difficult to bottom out the housing market,” Green said.
“The interests of investors are totally aligned with those of homeowners,” he added. “Investors are willing to put money on the table and frankly take their losses, which they already have.”
Foreclosures continue to rise, there will be even more, house value continues to decline, making even more homes worth less than what is owed on them.
Come summer, it will be impossible for the White House to deny that the crisis is worsening and the political fingers in the dyke will not prevent the dam from bursting.
HAMP Not Working, And Big Brother Knows It
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