Hat tip to Stephen for passing this along, from propublica:
The Hope for Homeowners program was created by Congress last summer to help an estimated 400,000 homeowners avoid foreclosure. But it could more aptly be called the Hope for A Homeowner program, given that just ONE has used it successfully since its October launch.
But silver linings are hard to come by these days, so we might as well point out that she is one satisfied customer.
“What a relief!” the lucky homeowner from Litchfield Park, Ariz., wrote to her mortgage bank, NationsChoice, in February. “An extra $542 in monthly savings and a $100,000+ principal reduction sure is a relief. Thank you!”
Hope for Homeowners was designed to give people who couldn’t afford their mortgage payments a chance to refinance into a 30-year, fixed-rate loan insured by the Federal Housing Administration, even if they owed more than their home was worth. But the lender would need to reduce the amount the borrower owed before the FHA, a division of the Department of Housing and Urban Development, would insure the loan.
The program has been a flop. But Congress and the administration are trying to rescue it, envisioning it as a key component of the government’s campaign to curb foreclosures. On Wednesday, President Obama signed a bill that includes improvements to the program.
Some think this is a mistake.
see the rest of the article here:
More help for failed flippers.What is wrong with our govt these days.Seems like total socialism to me.Is that what the real estate market has become?This kind of crap makes me sick when I am paying my bills.seems like I should just stop paying my bills so I can get a bailout too.What the hell is going on here people?
Why are “homeowners” more important than homebuyers? That’s what’s going on here. Government is telling banks to give money to borrowers in a principal reduction.
Why not just give the $$$ to buyers? It’s the same thing. You’re just giving money to a different group of people.
Yes, from the first two posts I can see we’ve truly become a nation of complainers.
*YOU* are getting a bailout too!
If you are a current homeowner, you can refi to an artificially low interest rate…right now! today! Brought to you courtesy of the US government. How is that not a bailout?
If you are a renter, you can purchase with the artificially low interest rate discussed above, *and* you can get $8K cash back at the end of the year from the government! How is THAT not a bailout?
You can sit back and complain, or you can go out and make the best of the unfortunate situation we find outselves in. See the glass half full for once, not half empty.
*One* person has used it successfully? I had to double-check the dateline to make sure it wasn’t April 1st. So, if you tot up the effort involved in producing that legislation, how much $/person helped did the legislation cost?
Principal reductions, artificially low interest rates, it’s all enough to make me want to move to another country. Bail out the deadbeats and pass along the bill to the taxpayers. How wonderful. A $100,000 principal reduction? What happens when in the future the person sells and walks away with that much or more? Why should they profit from their own stupid and selfish decisions. It fills me with Schadenfreude.
Locomotive Breath,
“*YOU* are getting a bailout too!”
Only if I buy a house. If I never buy a house government has stolen my tax dollars and given it to homeowners.
“*and* you can get $8K cash back at the end of the year from the government!”
Show me a principal reduction that 8k that makes a difference on the home “owners” monthly payment. To make this program work they’d have to knock off 30-50-100k from a mortgage.
What pisses me off more than anything is that I NEVER ASKED FOR A BAILOUT. I didn’t participate in the housing orgy of the last 10 years. I live responsively and pay my debts. Because of living frugally I have a decent amount of $$$ I can spend on a down payment and I also have great credit.
I should be able to take advantage of “homeowners” that threw caution to the wind living in the moment in a mortgage they could never afford. They need to sell at a loss and I can buy.
I could care less about the government free cheese. Just kick the deadbeats out of the houses they never should have been able to purchase in the first place. I’ll buy the property at the current market price.
Not surprising the program flopped. I hunted down the actual rules & read them. (I suggest skeptics do the same.)
It was designed as a welfare program. Welfare programs in the US are designed to be punitive. Restrictive. To appear to offer help, but in fact to deny help whenever & wherever possible.
When I was trying to be down in the welfare ranks, back 30 years ago, I learned there was one way, and one way only, to get public assistance: Game the system. Like as not, formerly middle class homeowners don’t know how to do that. Like as not, they haven’t a clue. Ditto for the banks.
Since new programs are often based on old programs, a solution could be had by simply finding a some other program on which to base Hope for Homeowners Mk. 2.
The unemployment system comes to mind. In such a system, bankers – or loan originators – would pay a fee to a state/federal agency, which would then be used to finance those, who, for no reason of their own, found themselves without a job – I mean, in danger of foreclosure. You go to the State Foreclosure Office, you present relevant documents, you file an application, which then gets a pro-forma approval, at the originating bank’s expense. And just as with unemployment, if the bank didn’t like it, they could appeal.
Appeals, by the way, would be interesting. It means the banker, or his rep, would have to go downtown & actually sit across the table from the hopeless debtor & a government mediator. I’ve sat in a few like that.
Employers with high turnover pay higher unemployment fees, at least in New York they do. If the state/federal government collected a flat 1% fee on each real estate transaction, they would have a bundle of money to work with. Loan originators with high foreclosure rates would pay higher fees.
Any chance of real help? No. None. Only more phony programs.
Locomotive, you’re complaining that people should be happy with bailouts and just shut up. Yet you have a problem with complainers.
More to the point, your main argument is that as long as everyone can do something that makes it okay. For example, everyone who didn’t loot during a riot is just a sour complainer. What’s more amusing is that to you, right and wrong itself is measured only by if it makes you money.
You’ve also made the parallel ridiculous argument that just because someone could take a subsidy and *didn’t*, that they’ve gotten a bailout. This is actually saying that if you *don’t* take money spilled out of a truck, you’re a thief. Absurdity aside, the fact is lots of people have no interest in buying a house subsidy or not!
shadash, this guy’s an obvious troll using a classic “You’re an American” argument. The argument simply follows: You’re an American, so you asked for and got a bailout. You’re an American, so you invaded Iraq. You’re an American, so you bought a house you couldn’t afford.
This is similar to the “You’re a banker” argument making the rounds this year, and a variation of the “You’re a man” argument made in the 90s.
“If you are a renter, you can purchase with the artificially low interest rate discussed above, *and* you can get $8K cash back at the end of the year from the government! How is THAT not a bailout?”
Well, to start out with, it’s not a bailout of the buyers because the buyers aren’t stuck with a bad asset or liability.
There’s a cogent argument that keeping borrowers in their houses helps keep neighborhoods safe and so on, but that’s not really a bailout either.
The artificially low interest rates and $8k credits are really indirect homeowner bailouts, and, really, to the creditors and realtors. (Who are really, much, much bigger beneficiaries of government largesse here than the homeowners.)
shadash,
What are you concerned about? You’re not a home buyer, you’re an armchair buyer. Your 2 cents might carry some weight when you’re serious about buying. My guess is that you’re waiting for a govt. handout before you buy.
BS Filter,
I’ve stated that I have a decent amount of money saved up for a down payment, I have a good credit score, and I’m posting on a housing website. But, I’m not considered a buyer? Please explain your logic I’d like to understand where you’re coming from.
By my calculations I’ve saved hundreds of thousands of dollars not buying for the last couple of years. Properties I like that sold for 800k 3-4 years ago are listing for 450k and the decline is continuing.
arizonadude-None of these government programs (and this isn’t the only one) help properties other than those the owner lives in. They exclude flippers entirely.
shadesh,
I’m sooooo impressed that you have a down payment saved and that you can actually post on a website (which could be accomplished by a 5 year old). The definition of a buyer is reserved for people that actually “buy” something. You’re not buying, you’re dreaming.
Just for the record, in my MLS I have noticed several homes offered as “short sales” with showing instructions stating “Call Tenant First”. Obviously some are attempting to game the system, which is easy whenever a government giveaway is involved. As well, I’ve heard of some tenants being bribed to allow the rental property address to be used as the landlord’s primary residence address and to keep their mouths shut if the bank or appraiser comes around. My guess is that there is as much “qualifying” fraud in these rescue programs as there was with the mortgage/securitization frauds.
Troll alert!
Armchair buyer career lookie loo alert No. 16.
Why is it that almost everyone these days feels like a victim??? I guess if I wanted to and i looked hard enough, I too could find something that makes me a victim. Life is too short–move forward–not backward!!!
Shadash is actively looking at properties, and has been making offers.
Nice save Jim! Way to stand up for the regulars. Shadash is a consistent poster and although I might not always agree with him, I always appreciate the content.
slightly off topic, but I just came across this video, in case you haven’t seen it:
http://www.youtube.com/watch?v=bNmcf4Y3lGM
Question(s):
If all of the deadbeat homeowners that took out loans they could never payback were kicked out of those homes, by banks that never should have lent the money in the first place, who would buy those homes?
Are there enough shadashes out there to take up all that inventory?
Would the majority of the homes be sold at bargain-basement prices to investors, who turn around and rent them to the very people who were foreclosed upon?
I think this is one of the reasons why some are trying to do principal reductions. There aren’t likely enough non-investor buyers out there.
Ronald McMansion,
The point is moot.
When you “invest” in property, one should actually be receiving returns What we have right now (at least in desirable coastal SoCal) is wishing prices that reflect a mirage of prior appreciation returns which are quite likely never to be repeated (at least in my lifetime). Or, at least, the circumstances under which you would see them, you won’t want to live in SoCal anyway.
If an “investor” wants to buy properties at these still inflated prices to rent to the few qualified renters left, any number of them are welcome to go blow their brains out with maintenance costs, higher taxes, and depressed rents all they want.
Because markets have a forward looking weight to them, there is no such thing as oversupply. The market always reaches its equilibrium. You may not agree with Say’s law, but it’s there in black and white. Delaying and forgiveness only hurts the banks which the US (and us) ends up paying for anyway.
BTW, at the right price, there are always enough non-investor buyers out there. Always.
As an aside, the US tax code (and California) actually favors active investors over single owners.
Thanks Chuck.
Instead of all these HoHo’s, why don’t we declare August Foreclosure Rental Swaparoo Month? All of the underwater homeowners can move into the rentals that are currently occupied by folks like shadash. The renters with downpayments in hand can move into the foreclosures at a 50% off peak price.
We all know where this is heading. Why don’t we just get it over with quickly and move on with rebuilding our economy? Seriously!
I’ve been asking that same question for 4 years now. Too bad not everyone sees eye to eye, or I’d have already bought my ocean-view mansion.
It’s the question of ripping the bandaid off quickly of slowly.
Both of them get you to the same point (bandaid off), but differs in volume/speed of pain.
Personally, I think ripping it off slowly is more painful, but I digress.
Reminds me of one of my favorite writer’s quotes:
Locomotive will be the first one against the wall when the revolution comes.
“Because markets have a forward looking weight to them, there is no such thing as oversupply. The market always reaches its equilibrium.”
Only in a ‘free’ system. But, no one does that and for good reason. IMHO SoCal is more whacked out than lots of other places. San Diego has almost no retail compared to many places in this country. I can find a nicer mall in Yuma than I can in SD. There is a reason why.. it is a wealth transfer, on imo one which is of non-value.
I’m with Shadash. We’ve also been waiting for the nonsense to stop. There is absolutely NO reason to bail out these deadbeats (borrowers and lenders alike).
Please point to the law that says taxpayers are responsible for saving over-leveraged borrowers and lenders and propping up artificially inflated prices.
We have also been living debt-free and have excellent credit, but refuse to compete with those who have no skin in the game and can default without any real consequences. Those who put more money down or pay cash have much more to lose.
In the meantime, we are rewarded for our prudence with sub-1% returns on liquid savings, and are forced to deal with the inflation and higher taxes that are a direct result of all the losers who took on debt they had no ability to pay off.
We have every right to complain.