Posts Tagged: mortgage modification

Bad cop finally emerges in foreclosure-relief good cop/bad cop routine

Sen. Tom Miller

Yesterday I blogged that federal efforts to mitigate the foreclosure crisis have largely failed. Nelson Schwartz of the New York Times reports on the next big federal foreclosure relief effort, one that stems from this fall’s “robo-signing” scandal. Unlike earlier Obama administration foreclosure policies, this effort by the new Consumer Financial Protection Bureau and states’ attorneys like Iowa’s Tom Miller and Illinois’ Lisa Madigan are more about retributive justice for homeowners deceived by lenders. (more…)

Hey, JPMorgan Chase Just Wants to Prevent Irresponsibility

The Treasury Dept. wants to alter its foreclosure prevention program so that banks change the balances of mortgage loans. However, JPMorgan Chase’s chief executive for home lending, David Lowman, doesn’t want to adjust loan principals — and even has the nerve to suggest that modifying these loans would reward irresponsibility. (more…)

Foreclosure Prevention: Take Two

The Obama administration’s foreclosure prevention efforts have so far proved insufficient and the White House is new charting a new course. The New York Times’ David Streitfeld reports on a plan to use $14 billion of leftover TARP money to help homeowners who face foreclosure. Under the plan, the Federal Housing Administration would refinance millions of mortgages by reducing the payments of borrowers who are unemployed. (more…)

PSA: Inside the Agency, Outside the Box at FDIC

Another in Understanding Government’s series “Public Service Announcement” profiling the careers and challenges of notable government employees

By Norman Kelley

At the epicenter of last year’s economic meltdown, along with the disappearance of major financial firms, was the collapse of IndyMac Federal Bank, a California-based institution that found itself overwhelmed with distressed mortgages. A result of the nation’s toxic housing bubble (and an at-sleep-at-the-wheel regulatory infrastructure), IndyMac was emblematic of the country’s national mortgage foreclosure crisis.  FDIC economist Clare Rowley was in the eye of Indy Mac’s particular hurricane, trying to rectify that bank’s troubled assets and find ways to save homeowners with IndyMac mortgages from foreclosure.

Clare Rowley with thanks to Washington Post-Newsweek

Clare Rowley

In July 2008, along with other FDIC colleagues, Rowley was dispatched to Pasadena, California, site of IndyMac’s home office. There she helped implement a mortgage modification program that allowed qualified but struggling mortgage holders to stay in their homes. The FDIC’s modification program, which some called a “Model in a Box,” consisted of three basic parts: lowering interest rates, extending  loan terms, and principal forbearance.  The model worked:  by the spring of 2009, 88 % of modified loans were still in force.

When the new Obama administration began tackling the mortgage crisis in mid-2009, (more…)

Banks to Treasury: You Can’t Make Me!

Theo Francis of Business Week has a smart piece about how the Treasury Dept. might cajole mortgage servicers to more energetically participate in a mortgage modification plan whose original goal was prevent four million foreclosures. The New York Times’ Peter Goodman, among other finance reporters, has recently blew the lid open on the program’s failures. Yet, as Francis reports, Treasury can’t force banks to help homeowners:

Treasury relies heavily on voluntary agreements and cash incentives to get servicers to help homeowners, both with primary home loans and with an as-yet incomplete program to tackle the second mortgages and home-equity lines that complicate many mortgage modifications. But servicers can opt to drop out of most of the Treasury programs. Ultimately, servicers may conclude that the Treasury needs them more than they need the government. Both the Bush and Obama administrations encountered great consternation whenever there was talk of meddling directly with existing mortgage contracts, particularly about the expense of buying up loans and modifying them en masse, as was done in the Great Depression. As a result, the emphasis has been on voluntary programs, on cajoling and jawboning banks and investors to go along.

Francis has some hope for “moral suasion” — especially on the part of banks that Treasury bailed out. But it’s not like banks could become more unpopular if they continued to resist permanently least, the voluntary program creates an anxious situation for cash-strapped homeowners.

Door-To-Door Mortgage Modification

The Chicago Tribune’s Mary Ellen Podmolik has an interesting story about how communities in southwest Chicago uses volunteers to deal with the home foreclosure epidemic. What happened is that upset residents met with Bank of America officials back in July and brokered a deal where volunteers are given the names of community residents with B of A mortgages who are delinquent in their payments. The volunteers, loosely coalesced by the Southwest Organizing Project, then knock on those peoples homes and warn that they may soon face foreclosure.

As I blogged about yesterday, the Obama administration has conceded that its mortgage modification program has failed thus far. What’s important in getting any modification program to work is to let homeowners know the program is not some abstract news story but exists to aid their financial troubles. Ned blogged today about how the Dept. of Agriculture has successfully let people know about the expansion of food stamps. The Treasury Dept. needs to do the same on homeowner assistance.

Obama’s Failure On Foreclosures

On some early Obama administration issues — labor market recovery, Afghanistan, health care reform — it seems folly to render an even temporary verdict on whether the White House has done a good job. That’s not the case with the epidemic in home foreclosures — thus far it’s been a clear failure. (more…)