Top Leaderboard, Site wide
Left Masthead
August 27, 2015
Truthdig: Drilling Beneath the Headlines
Sign up for Truthdig's Email NewsletterLike Truthdig on FacebookFollow Truthdig on TwitterSubscribe to Truthdig's RSS Feed

Get Truthdig's headlines in your inbox!

When Robots Run the Show

Truthdig Bazaar more items

Print this item

Will Mortgage Settlement Avoid Repeating Obama’s Foreclosure Failures?

Posted on Feb 11, 2012
AP / Susan Walsh

By Paul Kiel, ProPublica

(Page 2)

Some of the millions of homeowners who were rejected might be eligible for a second shot. Hundreds of thousands of homeowners were originally granted “trial modifications” through the program in 2009 and early 2010, only to be denied permanent modifications many months (and sometimes more than a year) later. Most of those homeowners started those trials by just giving their income information over the phone. They’ll be eligible to reapply, according to the proposed rules.

One of the recent changes to HAMP could reduce the cost of the settlement for banks—and leave taxpayers footing a chunk of the bill.

As part of [Thursday’s] deal, the five banks agreed to reduce billions in mortgage debt for homeowners in danger of foreclosure. Most of those principal reductions—about 85 percent according to Housing and Urban Development Secretary Shaun Donovan—will likely be for loans that the banks hold on their own books.

HAMP also has long offered investors incentives to encourage principal reductions. For loans owned by banks, the money goes right to them. In January, Treasury tripled those incentives. In cases in which a loan qualifies for HAMP, the government will now pay investors, often the banks themselves, up to roughly two-thirds the cost of a principal reduction.


Square, Site wide

The banks have agreed to perform at least $10 billion worth of principal reductions as part of the settlement. Because it’s unclear how many of the principal reduction modifications will be done through HAMP, it’s impossible to say how much of that will be covered by the government subsidies.

So far, about 40,000 HAMP modifications have been done through HAMP’s principal reduction program at a median reduction of $67,196, meaning that roughly $2.7 billion in principal has been reduced. If the banks find HAMP more attractive because of the increased incentives, that amount might increase sharply, and HAMP could experience something of a renaissance.


New and Improved Comments

If you have trouble leaving a comment, review this help page. Still having problems? Let us know. If you find yourself moderated, take a moment to review our comment policy.

By Dennis in Maine, February 14, 2012 at 6:48 am Link to this comment
(Unregistered commenter)

Headline this Tues Am, Maine 3rd state to hijack the money. I’m begining to see the BIG weakness in the States Rights arguement.
Are all these Refinances going to be on Fannie/Freddie? Did this deal just put another 700 billion dollars onto the taxpayer? Ew I have a bad feeling.

Report this

By Fibonacci65, February 13, 2012 at 8:47 am Link to this comment

ThinkProgress reports that two states, Wisconsin and Missouri, are using their foreclosure money to pay down state debt!  Apparently, Obama dared not tell the banksters or the states that this money is only for, um, people properly or improperly foreclosed upon.  Unbelievable!

Report this
vector56's avatar

By vector56, February 12, 2012 at 5:14 pm Link to this comment

This “back door bail out” of the banks and mortgage companies is just the latest in a long line of disappointments from Obama. 

So, to the theme from Shaft; “Who is the man who is defunding social security pimping the Heritage Foundations old scam of a Pay Roll Tax Holiday”; Barack!  Barack Obama, ” they say this cat Obama is a bad mother….(shut your mouth!)

“Who is the man that would Bust a Cap in the ass of anyone standing between BP and EXXON Mobile’s Black Gold in a heart beat; Barack!  Dam Right!

“He is a complicated man, and no one understands him but Goldman Sachs, BP, Big Pharma,  APAC, Wall Street, City Bank…..

Report this

By diman, February 12, 2012 at 12:23 pm Link to this comment

Mortgage settlement? Too late Mr.Obama.

Report this

By bpawk, February 12, 2012 at 11:45 am Link to this comment

Why doesn’t Truthdig bring on what the Greens are saying about the issues - enough already about “Obumney” - where is the Green view?

Report this

By litlpeep, February 12, 2012 at 10:06 am Link to this comment

Hearing more poop from this Administration like this is very tiring: “The administration says a bank could be fined up to $1 million per violation and up to $5 million for repeat violations.”

I want to know what, besides massive left wing voting for third party candidates will change the Administration’s rosy views of itself and its policies while Administration practices, habits, and policies continue to ignore massive, repeated, major illegal and otherwise inappropriate banking & finance industry activities?

Until we push this Administration against its own radical, habitual, unexamined hypocrisies we will see little more than big talk about little nonsensical symbolic gestures designed to make the most caving president in US history look like a new, better, billboard.

We need a president, and neither of the two big parties has the integrity to allow one get the nomination.

Vote for the most promising third party candidate.  Instead of enabling the bipartisan hack parade, enable creative alternatives to emerge.

Report this
mrfreeze's avatar

By mrfreeze, February 12, 2012 at 8:41 am Link to this comment

ardee - Perhaps your concerns, at least on this thread, aren’t worth much consideration. The conversation started with some specifics about how uninformed/misinformed the public is about the whole mortgage mess; I made the point that the situation with the banks is unsolvable….and you come back with an ad hom about me.

The fact is, you don’t listen. You just have an opinion (certainly shared by a lot of people) which happens to be based on some self-righteous dislike of the president & the government….So what? You still don’t know shit about the HAMP program.

Report this

By ardee, February 12, 2012 at 6:22 am Link to this comment

By mrfreeze, February 11 at 8:12 pm

Nothing in this entire screed addresses my concerns . Congratulations, for saying nothing.

Report this
mrfreeze's avatar

By mrfreeze, February 11, 2012 at 9:12 pm Link to this comment

ardee - Well ardee, I think you need a little “educating” about what I do or don’t think:

1) Not Blaming Obama for the housing problems in this country doesn’t make me “an apologist” any more than your unqualified, and frankly know-nothing grasp of the banking industry makes you an expert on robosigning or mortgage modifications. Your comment makes you sound shallow and sloppy…..please try harder next time.

2) So what if I’m a fatalist about the banking industry? By the way, the Justice Department has been around for a long time. How many bankers, banks and lenders have been prosecuted for their “sins” in the last 20 years? Forgive me for noticing, but there haven’t been any banks of note that have been fined or prosecuted by any AG’s that have “suffered.” So what if this administration is as ineffective as all the rest. You want what will never happen when it comes to the banks: justice…......please do hold your breath waiting for it…..I think you might look better purple.

Report this

By ardee, February 11, 2012 at 8:55 pm Link to this comment

Mr. Freeze you seem an apologist for Obama and a fatalist with regard to crooked banking practices. Your choice I guess but do not expect everyone to adopt your misplaced loyalties or your belief that Obama has done no wrong.

The banks engaged in many blatantly illegal practices, including kiting the estimated values of the homes they loaned money on. Now they pretend to renegotiate and then foreclose.

Obama has a branch of government called , inelegantly perhaps, the Justice Dept. Atty General Holder wanted to go after the Banks and the Financial community but was blocked from doing so, obviously by his boss who was more concerned with campaign donations than justice.

Report this
mrfreeze's avatar

By mrfreeze, February 11, 2012 at 8:40 pm Link to this comment

vector56 - You’re generally off-topic in your comment. Also, there’s NOTHING good about what’s gone on with the banks and the housing problems we’re having. I certainly never said there was.

I just reject the notion that Obama somehow “betrayed” anyone with regard to all of the foreclosure problems (or housing issues). He has never been in a position to “fix” anything. The banks hold ALL the cards (they have for at least 20 years) and blaming liberals or Obama or Barney Frank or whomever is simply a waste of whitespace.

Just sit down and handle a mortgage modification sometime and you’ll see how incredibly complicated they can be.

Report this
vector56's avatar

By vector56, February 11, 2012 at 7:37 pm Link to this comment

OK, you guys are starting to worry me!

“Mr.Freeze:  It’s good to have a experienced person speak to this complicated and urgent problem.”

1.) It is not complicated.

2.) Questionable urgent.

3.) Don’t trust the so-called “experienced” persons.

In a nutshell; Obama sold us out yet again! The banks at best will pay (maybe) 5 billion cash; 21 billion (of the 26 billion) will come our of the hide of “pension” fund write downs and accounting tricks that will leave the consumers holding the bag.

Think about it; Banks commit fraud (Robo signings)of 700 Billion to 1,3 Trillion dollars and get off the hook paying 5 billion cash; with immunity from civil lawsuits. 

MSNBC fake liberals spun this bad deal just as enthusiastically as they spun ObamaCare, The Pay Roll Tax Holiday, and Dod Frank. “Half a loaf is better than none!” This seems to be the norm.

The Pay Roll Tax Holiday was an idea dreamed up by the Heritage Foundation for the GOP to provide a “back door” method to defund Social Security. So, if the “fake left” can sell the defunding of SS, selling this new “back door bail out for the banks” should be a cake walk. Besides, there will always be those “experienced experts” lurking on the airways and in the blogosphere to assure us everything is fine, and “pay no attention to that man behind the curtain!”

Report this

By gerard, February 11, 2012 at 7:02 pm Link to this comment

Mr. Freeze:  Thank you very much.

Report this
mrfreeze's avatar

By mrfreeze, February 11, 2012 at 5:11 pm Link to this comment

Gerard -
  1.  Recently there has been a lot of talk about the banks “renting back” the homes to families who are being foreclosed on. There’s also discussion out there about renting the huge number of already-forelosed homes. Unfortunately, the banks look at this all as a bottom-line, profit/loss calculation. They couldn’t care less about the “property” they only care about the margins. Somewhere up there in “banker-brain” they’ve done the math and renting/leasing or helping the homeowners out simply doesn’t matter unless there’s money to be made.
  2.  Gerard, the bottom line is that the mortgage/deed of trust (promissory note) states: you don’t pay according to the contract….hasta la vista baby…....Ethics doesn’t enter into it when it comes to the banks.
  3. Here’s what bankers say when it comes to “writing down principle” or “modifying loans” no matter what the market does: “If we write down the mortgage now, when the market has tanked, will the borrowers in turn offer to give back any of the concessions we gave them if the market rises?” (remember Gerard, bankers are NEVER wrong and NEVER lose money) This is how they sleep better at night knowing that they oversold the property values when the made the loans and now want the borrowers to take the hit. 

In the end, if I had my way, every last mortgage in America…..EVERY LAST ONE would be re-written to compensate the homeowners for the “cooked” values the so-called free market created during the gold rush that the banks themselves encouraged (and who now want to blame on the borrowers, the government, Barney Frank….Casper the friendly ghost). The banks howl about the “moral hazard” of letting borrowers off the hook but when Paulson, Geitner, Bernankie, Summers and all the rest of those scumbags manufactured the bailouts, they themselves ignored “moral hazard” and actually proved just how hollow and meaningless that idea is.

Report this

By gerard, February 11, 2012 at 4:52 pm Link to this comment

Mr.Freeze:  It’s good to have a experienced person speak to this complicated and urgent problelm.
  I have a question, maybe two, and I know little about finance, so please keep the answers simple and clear.(If this asks too much, please neglect this post, and consider my apologies.)
  1.  Isn’t there some way that adequate, simple public housing can be made widely available to people whose economic situation is unpredictable, or over-exploited, or vulnerable for many reasons?
  2.  Why is it considered “fair business ethics"to evict people of inadequate means and keep the
money they have invested and sell the house to some other poor family only to repeat the process again?
  3. Why is it fair to ask people who can barely read, and scarcely understand what they read, to sign papers that legally bind them to obligations that remain unchanged,  no matter how the market falls and alters values, or how sick someone in the family becomes, etc. etc.  In other words, rigidity of long-term agreements that don’t allow for out-of-control economic fluctuations etc.?  Thank you!

Report this
mrfreeze's avatar

By mrfreeze, February 11, 2012 at 2:48 pm Link to this comment

OK, I think a lot of the Media and commentators here aren’t looking at reality. I happen to have some experience working with the HAMP program and after having helped quite a number of families stay in their homes via the program, I think you’re all at best misinformed and at worst, not living in reality.

1)There was/is NOTHING, NOTHING, NOTHING, NOTHING the administration could do to stop the train-wreck caused by the real estate “gold rush.” The train had already left the station by the time anyone had a sense of the enormity of the catastrophe.
2)Yes, the HAMP program was/is a failure because the lenders were not FORCED to fix the mess. But let’s all be honest: There was no one in government willing to take on the banks. If Obama had fought that fight he would have lost and you’d all be engaged in yet another form of Obama-hate. 
3)The financial institutions committed to using HAMP (I work for one) bend over backwards to try and keep people in their homes. Even so, the complexities of mortgages is mind-boggling. I’m not letting Obama off the hook, but I’d also like to remind you all that there’s a lot of armchair quarterbacking going on.

Instead of focusing on what Obama has done or not done, I think more emphasis should be put on the Republicans who have been preaching the “free market” attitude to foreclose on everyone who is in trouble. They’re the real jerks.

One last thing: we always hear about the failures but after having helped quite a number of people stay in their homes as a result of the program, I can tell you it sure feels good when it works.

Report this

By ardee, February 11, 2012 at 2:25 pm Link to this comment

All that moneyt works out to about $2000 per foreclosed household..big whoop.

Obama is a fraud.

Report this

By bpawk, February 11, 2012 at 2:02 pm Link to this comment

Nothingn works like regulation! Anything else is just a bandaid.  He’s out for a second term.

Report this

By Dr Bones, February 11, 2012 at 1:57 pm Link to this comment
(Unregistered commenter)

Lessons learned?  NONE

We the citizens, bailout the top 1% every ten years.

Report this

By TheBrix57, February 11, 2012 at 1:56 pm Link to this comment

The robosigning just got bigger and better! There is not even ANY type of agreement, yet the state attorneys general supposedly have signed off on this. The “agreement” has to first wend it’s way through the court system. Talk about an election year political bomb!

Guess who pays for all this? Simply the American taxpayer, as usual. Not one penny of the $25 Billion will be paid by any bank, it will simply be passed along to the American customers. Does anyone really wonder who is going to profit from this? It would have been so much better for all those involved simply to sue each bank individually. Too big to fail?

Report this

By John Poole, February 11, 2012 at 1:01 pm Link to this comment
(Unregistered commenter)

Blueokie is right on. Look for more tax payer bailouts as a means of making
things right for the rich who have to be “compensated” for being stuck with seven
trillion in “toxic” assets.

Report this
prisnersdilema's avatar

By prisnersdilema, February 11, 2012 at 12:52 pm Link to this comment

No, because when the economy crashes again there will be no stopping it…

Its 2008 all over again..

Report this
Blueokie's avatar

By Blueokie, February 11, 2012 at 12:40 pm Link to this comment

Calling these type of policy decisions by the Administration failures is a mistake.  Obviously at every turn the strategy of Obamafraud is to protect capital from loss and accountability.  I suppose the thought of failure could be in attempts by the Administration to “spin” his anti worker, anti middle class policies, which he is
steadily consistent on, as being done with their benefit in mind.

Report this
Right 1, Site wide - BlogAds Premium
Right Skyscraper, Site Wide
Right Internal Skyscraper, Site wide
Right 2, Site wide - Blogads
Join the Liberal Blog Advertising Network