New Efforts to Help Struggling Homeowners
http://thedianerehmshow.org/shows/2012-02-07/new-efforts-help-struggling-homeowners
Following the 2008 housing crisis, banks across the country foreclosed on borrowers. To speed up the process, some lenders used fake signatures or didn’t bother to verify the accuracy of loan documents. A pending multi-billion dollar settlement between the banks and 40 states would ban so-called “robo-signing” and require banks to lower principal payments for “underwater” mortgages. Consumer advocates worry the settlement would not go far enough. Business groups say the market would do a better job clearing foreclosed homes. Diane and her guests discuss efforts to help struggling homeowners.
Guests
Brady Dennis
national economics reporter, The Washington Post
Ed Pinto
resident fellow, American Enterprise Institute; former executive vice president and chief credit officer for Fannie Mae
Kathleen Day
spokeswoman, Center for Responsible Lending; ethics teacher at Georgetown University’s graduate program in real estate studies.
Comments
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I'm sure the banks get a write off on the foreclosure balance. I think if they were able to write off the upside down amount at lets say 100% and the full forclosure amount at a considerable lower %, they may be motivated to keep homeowners in their home.
JJackman wrote:
Ed Pinto's claim that government policy is entirely to blame is a transparent and self-serving fabrication. Greed and cynical exploitation,lobbying to remove all restrictions, and the purchasing of the legislators who voted for such lunacy, and then bending the rules that were still left is to blame. The tranching of trash to create fibbed-up Triple A securities out of garbage loans was not a government policy.
JJackman FTW!
@cybexg
But the fact still remains that the people being foreclosed WEREN'T PAYING THEIR MORTGAGES.
All this other stuff is just a smokescreen.
The people who took someone else's money and took a house are thieves and should be foreclosed as soon as possible.
@Joetx,
What did he win? There was not a factual syllable in his entire temper tantrum of a screed.
Greed? Cynical exploitation? Those aren't facts? That's the sound of someone furiously thumping their little blue book of morality.
Will McJunkin wrote:
What do you know, another Diane Rehm hour with someone from the conservative American Enterprise Institute.
Why don't we just start calling The Diane Rehm Show the Diane Rehm/AEI Round-table?
Will McJunkin wrote:
And what's worse is that it's not like this is FOX News, which everyone expects to pump out pro-bank/corporate propaganda. What makes NPR's kowtowing to corporate agenda so destructive is that everyone thinks they're center-left and thus reasonably balanced, so they take this stuff as a real discussion of the issue, when it's anything but.
+1
Disappointing isn't a strong enough word when I hear the DR Show continually give a microphone to right-wing think tanks to spread their lies to satisfy some wrong-headed notion of "balance." Does the DR Show or NPR give the KKK a platform to spew their hate when discussing racial issues?
Mortgage relief --- really?? Many may recall that during the 1980's in Texas/Oklahoma/Lousiana -- when oil pxs collapsed so did housing prices - very much on the scale of what we are facing today. I do not recall there was any government relief provided to this region of the country. FWIW, we owned a house in Houston whereby over 50 % of the homes in the neighborhood were in foreclosure. We sold it @ 58 % of what we paid for it & went to the closing with a check (very painful by the way).
The purchase of a home for most is the largest purchase they will ever make. Believe it is not too unreasonable to expect that they do their homework before they decide to buy a home & obtain a mortagage. If you borrowed the money you have to pay it back...
He summed up the cause for the housing crisis.
You obviously don't see it that way. Ignorance is blind.
Wait for it....wait for it....."let's remember, Obama inherited this problem." YAYYYYYYY!!!!! Couldn't close the show without this mantra pearl. Let's always remember shall we -- all of our problems were caused by somebody else. Great lesson for the kids and the next generation. You forgot to add that in some twisted dimension, this is also somehow the responsibility of the rich and successful to fund. Oh if there was only a couple more seconds in the show to remind us of that too!
We are currently refinancing our home. We are underwater & we've been making payments and we are in good standing. Our lender has told us that we qualify for a refinance according to the program for underwater home owners, but it appears that Freddie Mac is inexplicably trying to block the loan from going through.
Regardless of how responsible your guest things a company's hedging their bets is, if you are in the position to fix the game and you are fixing it to make home owners lose something is very, very wrong.
I would take that 3 1/4 percent deal with the same payment if I could get it.
Beginning next fall, it will be a requirement for all freshman at Texas colleges and universities to take a personal financial management course. Hopefully this will arm a at least a few young adults with the knowledge needed to be successful consumers.
We don't have a free market; we have crony capitalism. You are correct: the government caused the problem... when it was bought out by corporate interests and established programs promoting their profits to the detriment of homeowners and taxpayers. Corporations are not "the people" and should not control the elections.
Joetx wrote:
"Disappointing isn't a strong enough word when I hear the DR Show continually give a microphone to right-wing think tanks to spread their lies to satisfy some wrong-headed notion of "balance." Does the DR Show or NPR give the KKK a platform to spew their hate when discussing racial issues?'
Now here's a rational thought!
Monte I think you are missing one critical part of this problem.
I agree that free market should be allowed to run its course, but this problem, the meltdown of the housing market, was triggered by the deregulation of the housing industry. Reagan started the deregulation, Bush continued the same policies and they were finally cemented into law under Clinton.
The deregulation of the industry resulted in a financial incentive to sign as many loans as possible, the risk was than packaged and sold to the US taxpayer. It was deregulation of the industry that allowed for this.
It was the absence of the US government that resulted in the problem, not as you are suggesting the opposite.
These are short sighted policies that we(the tax payers) end up paying for
they deregulated the housing markets = housing crisis
they deregulated the financial markets = S & L crisis
they deregulated the energy markets = Enron crisis
What's next? great policies, let's elect those in favor of deregulation again!
Same thing happened to us, only in 2009, and in Arizona. We sold for 30% less than what we paid, took the financial hit and moved on. We are still trying to recover but not looking for handouts. We are the "responsible" buyers with our credit intact, saving again for the next 20% down payment on a house.
Joetx,
Blaming "greed" for the crisis is like blaming gravity for the collapse of the termite-eaten house.
Greed is universal.
This is why that clown is nothing but a morality thumper. *His* greed is ok. His greed wants to get a discount on his house, wants cheaper gas, wants lower interest rates, and wants an increase in salary. But that greed is ok because it's his.
It's only when he sees the same traits in others that he tsk tsks, and wags his finger and shakes his little holy book about proper moral conduct.
But greed is universal, as I said. You can't find the cause by saying "greed did it." That's as stupid and unproductive as trying to figure out why the plane crashed by studying gravity.
Jim 100% agree and it’s an issue that the media does not focus on. Why should individuals who took out mortgages they could not afford be given any relief? If it’s OK for these home owners to be given assistance then what about those of us whose homes have devalued and did not part take in the madness, we to should be included. Because of my new neighbors who could never afford their super inflated home price mortgage I’m stuck with the consequences and the banks won’t even talk to me let alone help me. In my comment I reference a great web article that echoes your views. Chris.
jim davis wrote:
'Wait for it....wait for it....."let's remember, Obama inherited this problem." YAYYYYYYY!!!!! Couldn't close the show without this mantra pearl. Let's always remember shall we -- all of our problems were caused by somebody else. Great lesson for the kids and the next generation. You forgot to add that in some twisted dimension, this is also somehow the responsibility of the rich and successful to fund. Oh if there was only a couple more seconds in the show to remind us of that too!"
If there was any doubt where this totally biased panelist was coming from, there it is!
@john levenberg
Holy crap. You are proof that a little bit of knowledge is more dangerous than no knowledge at all.
I can't fix your problem in the space of a comment box. But I would recommend that you not get your information from internet tabloid yellow journalists like Huffington.
They didn't deregulate the housing markets. The amount of regulation has only gone UP.
Enron wasn't caused by deregulation. If it did, then you need to explain why Enron couldn't take advantage of Texas deregulation, or any other place that completely deregulated. They only did in California. Why? Because CALIFORNIA DIDN'T DEREGULATE. This is one of the biggest lies in your quiver.
The S&L crisis was not caused by deregulation. It was a long time in the making, beginning with the New Deal regulations and Regulation Q. Why don't you read up on that? The Reagan deregulation was botched, but it certainly wasn't the cause of the problem. The cause was too MUCH regulation.
A few good books if you're not afraid of a little challenge to your belief system:
Engineering the Financial Crisis: Systemic Risk and the Failure of Regulation by Jeffrey Friedman
Unchecked and Unbalanced: How the Discrepancy Between Knowledge and Power Caused the Financial Crisis and Threatens Democracy (Hoover Studies in Politics, Economics, and Society) by Arnold S. Kling
Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon by Gretchen Mortgenson
Pteromandias wrote:
@john levenberg
Holy crap. You are proof that a little bit of knowledge is more dangerous than no knowledge at all.
"I can't fix your problem in the space of a comment box. But I would recommend that you not get your information from internet tabloid yellow journalists like Huffington."
Thanks for that, I try to put out a few facts for reasonable people to think over and then something like this comes up as something put forward as serious. the lack of common sense here is breath taking. I just get tired of typing when there is no hope.
@ Rebecca,
Rather than taking your lender's word for it, you should check to see if you actually qualify for the Freddie Mac program. In order to qualify for the program, your mortgage must be held by Freddie Mac.
I have a friend who spent many months sending documents and making phone calls to Bank of America, which was his lender and services his mortgage. Apparently, no one at B of A did the most basic thing when taking his application, that is check to see if his mortgage was held by Fannie Mae or Freddie Mac. If they had, they could have told him immediately that he would not be able to get help under the Federal program. To add insult to injury, eventually some woman at B of A told him all would be fine. She then steered him to a sleazy lawyer who almost swindled my friend out of $1000.
If you go to Freddie Mac’s web site, you’ll find plenty of info about their programs. In addition, they have a page where you can quickly find out if Freddie holds your mortgage.
I keep hearing people ask the question "Why should homeowners be bailed out when they were too irresponsible to get into the situation in the first place?"
To say nothing of those who can still pay for their homes but are simply worth FAR less than they owe, how about TARP?
The banks were bailed out because they were too irresponsible to get into the situation in the first place as well. The difference is that I'm not trying to make money off of other homeowners foreclosing or defaulting (unlike the banks). I just want to be able to pay for a home with a mortgage near what the home is worth.
I believe that principal reduction should be a part of loan modification process. Currently the borrower carries the brunt of home devaluation. I believe the lending institutions should share in this risk.
Its not about irresponsible, its about losing our jobs. We were making enough to cover the expense and with the upside down bubble the 100,000 down is all gone and I'm still upside down by anothe 60,000.
I heard the show this morning in the car. This entire lawsuit seems unfair to the banks. How many ordinary people could live up to the paperwork standard the government and most of the public is requiring of the banks. I'll bet most people have signed something for someone else in their household. Would most (even any) of us tolerate the amount of paperwork the banks must deal with if someone decided to require it of us to stay in our homes? And would we manage to get it all even close to correct?
Keep in mind that the banks are just trying to obtain what is rightfully theirs by the mortgage contract. In none of these "scandal" shows have they found anyone who was foreclosed on that was actually current on their loan.
My impression is that most people who find themselves in foreclosure have had a lost job or some similar unexpected hardship, but this doesn't mean they should be allowed to demand a house (or any other goods or services) that they can no longer pay for. This creates a system where those who cry victim the loudest get everything. Many people in this same situation moved out of their home - how is letting others stay without paying fair to them?
Our system depends on holding everyone to the same standard. Eventually, if we stop holding to people to their loan terms, the offers of loans will stop - they have certainly slowed down already.
When the right wing American Enterprise Institute representative says that we need to get this foreclosure business behind us and get the economy going, what he really means is that we need to get the focus off the struggling middle and working class and poor and move it back onto what profits can be made by the rich (who are just sitting back and playing monopoly).
In cities where there is both a housing shortage for renters and homes on the verge of foreclosure, why can't more homeowners be encouraged to take in renters? This could help the homeowner pay the mortgage without having to resort to a government bailout. Also it would help the renter by providing more places to rent. Renters are often forgotten in these discussions. America faces an overall crisis in housing affordability. Encouraging homeowners to take in renters would help both homeowners and renters. Single family zoning might stand in the way, but some of those restrictive zones can be changed at the local level. It doesn't make sense to have lots of land locked up in neighborhoods that are more expensive than most of the people in the area can afford.
Sorry, I'm more free market. As far as I am concerned this is all just the banks consolidating their gains from the housing crisis at our expense.
My resolution would be to go back to real accounting practices instead of this mark-to-market crap and make them show the real value of the homes with bad mortgages on their books. Then we also do not allow them to keep these homes as "shadow inventory" and not on their books, which has created a glut of homes (roughly 800k-1.6 million). This glut is stalling the recovery because it interferes with the construction industry.
Once those two things happen, no more banks! They are bankrupt by massive amounts and will fold once they are forced to display their real books. All their properties would then hit the market all at once, driving the cost of houses through the floor. MASSIVE home buying spree at rock bottom prices! Homeowners walk away from their mortgage as a business decision to save money and can then buy their home or one like it for pennies on the dollar.
No more housing crisis! Guess they should have done their due diligence after all. Gotta love the free market. ;)