Looking back over the last year, I can’t help but notice the ridiculous amount of clever names used by our government and other consumer advocates in relation to homeowner foreclosure assistance and relief.
The latest Hope for Homeowners program has met little fan fare on this blog because quite frankly, I feel it is just the same ole BS help that makes it only voluntary for lenders and servicers to cooperate and help struggling homeowners.
Voluntary Lender Participation
FHA will continue to offer lenders an alternative to foreclosing on borrowers. Similar to FHA Secure’s recent expansion, lenders will be encouraged to write-down the outstanding mortgage principal balances to 90 percent of the new value of the property. In many cases, reductions in principle will cost lenders less than the losses associated with foreclosure.
The success the success of Hope for Homeowners and the others to come before it depends on the lenders willingness and mortgage servicer cooperation to take 10 percent less than the appraised value of a home.
In many areas this could mean a 40-60% and even 80% plus losses in many metropolitan areas on each and every mortgage.
Here in Southern California (especially the Inland Empire where I reside), lenders would have to take $500,000 hits on each mortgage write down for the Hope for Homeowers program to work. I just don’t see this happening anytime soon folks. Multiply these loses of mortgages and homes, trillions in potential write downs and we will then have a run on the remaining banks.
They know this and I know this. How come no one else seems to get this?
From Hope Now to the Hope Line. From Hope for Homeowners to No Homeowners Left Behind. From the FHA Secure to the FHA Modernization Act. From the Emergency Loan Modification ACT of 2007 to the Emergency Economic Stabilization Act of 2008.
Can we confuse Main Street anymore with these clever names and with no real help behind the names?
When the Hope Now rate freeze plan was released in late 2007, the Treasury chief said that in addition to the 600,000 sub-prime borrowers who might qualify for a rate freeze, another 600,000 could qualify to have their loans refinanced at more affordable rates.
Many consumer advocates like myself are looking for these Hope Now frozen mortgages led by US Secretary Paulson and his army of lenders that took out their freeze guns and placed a “limited” amount of loans in a “secret” freezer that no one seems to no where (kind of like the Area 51 mystery).
Shortly thereafter the much hyped FHA Secure loan that was “supposed” to be a life raft for hundreds of thousands of struggling homeowners.
The program unveiled by the Bush administration in August 2007 that was boasted to save tens of thousands of homeowners from foreclosure had aided just 266 borrowers as of December 2007, according to government data and there hasn’t been much data since.
But then I looked at the HUD website today and this is what they are saying about the FHA Secure.
Program Timeline
The program will last from October 1, 2008 through September 30, 2011. Since September 2007, FHASecure has helped more than 290,000 families obtain safer, more affordable mortgages. FHASecure is on pace to help 500,000 families by the end of the year.
Is it modern day propaganda?
I wrote about these hypes and puffed up number in my blog post titled, The FHA Secure Bait and Switch - FHA Clearly Violates Truth in Advertising Laws .
“Thousands Have Switched to FHA Secure to Keep Their Homes - Why Not You?” - FHA Website
“only 266 such borrowers have cleared all FHA hurdles, according to data compiled by the Department of Housing and Urban Development that was provided to Reuters” - Reuters
“In only the first 4 months of FHASecure, more than 40,000 households have refinanced under the new housing insurance program to protect their families’ investment in the American Dream.” - FHA Website
“Here’s the truth: FHA Secure has received about 3,000 applications from homeowners who are delinquent on their loans and has closed on about 600 since September, that answer from an official HUD staffer who gave me the actual numbers after more than one request.” - Diana Olick
To this day, I have yet to find a mortgage lender that carried or offered the FHA Secure Loan and have not met one single struggling homeowner that has been helped with this FHA program.
Then we had Project Lifeline that was designed to pull the people out of the foreclosure. The program was touted has not a solution to the housing crisis but was considered a “pause” in the foreclosure process, giving homeowners an extra 30 days to work out a payment or modification program.
Remember Project Lifeline? Me neither…
Read Moe Bedard’s research on the FHA Secure and Other Foreclosure Flops:
News you may be able to use
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