Understanding Government

Four years after the housing bubble burst, all levels of government are getting their bearings in addressing the foreclosure crisis. A mix of programs are either being started or revived that might actually address specific payment problems homeowners face.

Illinois announced on Friday that it will use $100 million in federal money to start a Mortgage Resolution Fund, where a public-private partnership will buy “underwater mortgages” — those where delinquent payments are worth more than the mortgage itself — from homeowners in the Chicago area. (more…)

Most Wall Street banks that took out TARP loans in late 2008 have long ago paid back the Treasury Dept., with interest. But many smaller banks, including most Wisconsin community banks, which took out TARP loans have still not paid back the money, reports Paul Gores of the Milwaukee Journal Sentinel. The situation provides another sign of a still-unhealthy economy and the Obama administration’s dominant focus on big banks.

According to Gores, federal taxpayers have recovered $251 billion from a TARP program that gave banks $245 million. This is because banks getting the most TARP money, like Goldman Sachs and Bank of America, raised money by issuing stock and quickly repayed taxpayer money with the required interest.  For that quick return, Beltway cognoscenti have called TARP the “the most successful and least popular American economic policy in the past decade” and hailed Treasury Sec. Tim Geithner as an unsung hero.

But what is happening with TARP money around the country shows that while the program has been a success, the story is a bit more complicated. (more…)

Few politicians are as polarizing as Minnesota U.S. Rep. Michelle Bachmann. So it’s no surprise that Democrats are going after her vote to defund TARP’s Home Affordable Modification Program, reports Andy Birkey of the Minnesota Independent. But Bachmann is doing nothing different than her Republican colleagues who already voted to terminate a Federal Housing Administration foreclosure prevention measure and who have spoken in favor of eliminating all such Obama programs.

Another thing:  Bachmann has a point. Even progressives readily admit that HAMP is a failure that has yet to gain momentum. Democrats who support of foreclosure prevention programs should propose an alternative plan of action than defend the current menu of policies.

The Associated Press reports that foreclosure filings fell last month both in Illinois and nationwide — down 24 percent in Illinois from October, and down 21 percent in the state compared to November 2009. However, the AP buries the lede. (more…)

More than two years after the housing market began its epic collapse, plans to help homeowners left underwater by declining values and loans they can no longer afford are on the way . . . or are they?

Meant to bail out strapped homeowners, a federal-state program aimed at enticing bankers to forgive some of the principal owed on homes is proving a difficult sell to mortgage servicers. So far, only one major financial institution, Bank of America, has agreed in theory to participate in a key provision: reducing loan principal for mortgage holders. (more…)