Most federal assistance programs are a waste of money. They set up an entrenched bureaucracy that drains taxpayer resources and provide little economic return. There are exceptional government programs that deliver great benefit at little cost to taxpayers, but the foreclosure counseling services are not one of those programs. Most of these borrowers are hopelessly underwater or overextended. The counseling might have done some good before they got into this mess, but at this point, telling them what they should have done differently isn’t going to help.
Programs like this are created as political cover to deflect criticism that the government is not doing enough. There is little or no hope these programs will have positive outcomes for anyone involved. Most of the borrowers who “benefit” from these programs get sold into slavery for a lifetime to “save” a house they would be better off losing in foreclosure. These programs are a sham, and they should be eliminated.
… Last November, Congress also appropriated $45 million for housing counseling in fiscal year 2012 through the Department of Housing and Urban Development after slashing all counseling funding during April budget negotiations. HUD had requested $88 million.
They should be downsized out of existence. These services are part of the amend-extend-pretend charade. Banks need to foreclose on these people and be done with it. Most of these people have been struggling for five years. At this point, a foreclosure is a mercy killing.
At this point, they are just helping people game the system for more free housing.
The situation was triggered by buying too much house.
“The fact that they’re current does not mean they’re not struggling,” Fuhrman said. He estimated that 50 percent of the foundation’s clients are current on their mortgages, compared with 30 percent last year.
More than half their clients are squatting until foreclosure.
Which is why they keep petitioning for more government funds.
An 83% failure rate is a sign of success?
You can imagine one of those counseling sessions, can’t you?
When a client cannot stay in his or her house, a counselor’s guidance and support can help borrowers make a smooth transition to a smaller house or out of homeownership, counselors said.
We need counselors for that? Didn’t a representative of the bank tell them the same thing? Perhaps the banks should put more kind words of sympathy in their get-out-of-our-house letters? We need kinder and gentler banks, right?
Perhaps it will die this time around. The last thing we need is another entrenched bureaucracy which accomplishes nothing.
“I do feel we’re at a point now where it is no longer a question, the value of the nonprofit space in providing these services,” Richardson said.
I wonder if Mr. Richardson said that with a straight face?
Even so, counselors predict a bleak outlook for homeowners in the coming years and say client numbers will remain relatively static until at least 2014.
Client numbers will remain steady until lenders get serious about clearing out the shadow inventory.
As many as 3.6 million mortgages are expected to enter foreclosure, short sale or distress through 2013, according to a Bloomberg Government study published July 13.
HPF, whose HOPE Hotline has received an average of 1.3 million calls a year since 2007, estimates it will continue receiving at least 1 million calls per year, according to Fuhrman.
“The role of housing counselors is only going to grow,” Berenbaum said.
Not if we can manage to kill off these programs first.
Five years squatting — a new record!
As the housing bust drags on, so does the amount of time delinquent mortgage squatters get to live in their houses payment-free. The former owners of today’s featured property got to squat longer than anyone I have seen so far. The quit paying something in the first half of 2007, a little over a year after their last Ponzi refinance. The lender didn’t foreclose on them until 2/3/2012, almost five years later.
Were you paying for your housing over the last five years. These people weren’t.
This property was purchased for $235,000 back in 1993. I don’t have the original loan information, but based on subsequent refinances, the likely put 20% down.
On 10/29/1998 they obtained a $36,231 stand-alone second.
On 10/15/2002 they refinanced with a $300,700 first mortgage.
On 12/18/2003 they refinanced with a $360,000 first mortgage.
On 1/6/2005 they refinanced with a $426,000 first mortgage.
On 1/3/2006 the refinanced with a $490,000 first mortgage.
Total mortgage equity withdrawal was at least $265,000 plus their original down payment. Not a bad take, particularly when you factor in the benefit of nearly five years of squatting.
What should this guy be counseled to do?
Is a credit re-pricing event brewing just below the surface? If so, the sellers window is about to be slammed shut.
Printing money and overstaffing government offices may look like growth for a period of time, but it is actually the road to poverty, corruption and, ultimately, political upheaval.
Opaque, overleveraged and vulnerable Financial Institutions which need to be propped up by the implicit or explicit guarantee of sovereigns does not make for a solid financial plumbing system for the global economy…this is a formula for power entrenchment, favoritism and shady deals behind closed doors.
What stops the federal reserve from buying the debt at inflated prices to maintain interest rates? Even if no foreign buyers want our overpriced debt, the federal reserve can always print the money to buy it until inflation finally forces them to stop.
And once we have some inflation, the fed will wait until everyone is having a great time at the party before taking the punch bowl away.
Will they be able to get everyone to leave once the fights break out, well we still have Volcker around for that.
2) why would the powers-that-be totally destroy the very ‘thing’ that gives them their power? By doing so, their pensions, vsrious income streams and other self-interests would become worthless.
1) the bond market is the BIGGEST of ALL markets.
2) Around the globe, who are the people demanding govt’s implement austerity and raise taxes vs printing infinitas? Bondholders. Why are they demanding this? They want to be paid back and NOT in devalued paper.
Then shouldn’t mortgages rates go sky high? If an investor is going to loan me money in US dollars to purchase a house. And those US dollars are devaluing, therefore the investor is going to demand a much higher rate or return for devaluing risk in my mortgage.
I can see IR point that US will purchase it’s own debt thereby keeping the rates low until inflation just gets too bad. However, the investor in the US mortgage is going to demand a higher rate of return at the beginning of this process.
The federal reserve has shown a willingness to buy mortgage-backed securities directly. They can keep mortgage rates low if they want to.
OK, I think I finally understand the process. The Fed will purchase US debt AND mortgages. They can come in a flood of money drive down the rates across the board.
Wow, that some major market intervention.
Has this every happened before?
Is this the first time el O has been optimistic?
Prior to the economic crisis of 2008, the federal reserve had never bought or sold anything other than short-term us Treasuries. So, no, never in history has the Fed bought longer term Treasuries or mortgage-backed securities. In fact, back in 2007, the idea that the Fed would do these things was inconceivable. It was also inconceivable that the government would take over the GSEs, but that happened too.
The new wrinkle on amend-extend-pretend.
Lanzner jumps on the bankwagon and calls the bottom.
How hard is it to say “bottom” and “home prices” in the same sentence?
•The S&P/Case-Shiller 10-city price index rose 2.2 percent from April — tied for 2nd biggest month-to-month advance ever in this benchmark with a history dating to 1987. (S&P math tracks gains and losses on properties sold.) In July 2004, the S&P’s 10-city price index enjoyed its monthly best upswing of 2.3 percent. S&P’s 10-city price index did fall at a 1.0 percent annual rate in May, and while it’s the 19th consecutive dip — it’s also the smallest year-to-year drop since November 2010.
•CoreLogic found home prices nationwide, including distressed sales, increased in May on a year-over-year basis by 2 percent and 1.8 percent, month-to-month — the third consecutive increase shown for both benchmarks. CoreLogic math is much like S&P’s.
•And we’ll toss in this nugget: DataQuick’s simple tracking of the median selling price in 98 major cities shows buyers paying 7 percent, year-over-year, in late July.
That would seem to be plenty of evidence of a bottom — but in today’s seemingly jaded economic world, it’s clearly not enough. So, what might they be saying?
Even locally, we’ve seen a firming of prices.
DataQuick’s monthly median selling price hit a new post-crash high in June — up 14 percent since December (and 1.8 percent in a year) to $455,000. And the S&P index for Los Angeles and Orange counties in May found home prices falling at a 2 percent annual rate — and while it’s the 18th back-to-back decline — it’s also the smallest year-to-year drop since March 2011.
Based on what? Wishful thinking? Fed fund rates going negative?
I would like the folks at IHS to explain were Joe Average is going to get cash money to service all this new debt (in the form of higher prices) as well as existing debt (in the form of existing over-leverage).
If IHS thinks wages are going to rise, they are asleep in wild rivers dreamland.
Global Wage arbitrage will guarantee the same (or even declining) wages for the foreseeable future.
If anyone has different information, I would sure like to hear about it.
Has anybody notice the 10-year US Treasury Note creeping back up?
I was being kind. I couldn’t think of one either when I wrote that.
IR, you need to be declared an industry.
“I don’t want those jobs taking root in places like China, I want those jobs taking root in places like Pueblo,” Obama told a crowd gathered for a campaign rally at the Palace of Agriculture at the Colorado State Fairgrounds here.
He made the remarks while pushing for the renewal of a tax credit for wind energy manufacturing – something Romney opposes – and for the creation of credits for companies who bring jobs home from overseas, as well as the elimination of loopholes for offshoring.
The world has come full circle. We should embrace communism to counteract the failings of capitalism? I don’t think so.
This is a pretty one-sided post. The HUD counselors are providing a tangible benefit, so the debate should really be framed as “Is it worth the cost to taxpayers?”. Probably not, but without a comprehensive study, who knows for sure.
I’ve referred people to the HUD counseling program several times throughout the years, often times anonymously through these housing blogs. The response has always been one of gratitude. Not everybody is as smart about housing and banking as people like the readers of this blog are. Often times people feel lost and hopeless, which leads them to pay money to crooked attorneys promising to solve all their problems, just before they skip town. The main inefficiency with HUD counseling is that the people that really need it don’t know it exists. Therefore, I’m betting much of the money allocated to the program is wasted.
On the other hand, telling people how stupid they were for getting a ponzi loan is also a waste. The people that sincerely want to keep their HOME already know they made a mistake. What they need is help avoiding any further mistakes. Rooting for the banks to hurry up and foreclose on these idiots is really simplistic thinking. This situation is far more nuanced than that. I think only somebody that has helped people with their housing situation and heard stories of terminal illness, death of a spouse, loss of income, divorce, and so on, can appreciate what people are going through. Yes there are also plenty of people gaming the system, and that is equally depressing.
So I guess it comes down to…Do we punish the undeserving along with the deserving, or do we instead help those that are suffering at the risk of also helping scammers?