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The Daily Scoop

Many cooks in the mortgage-aid kitchen

Richard Defendorf, contributor

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As we’ve complained a few times before, the government’s Hope for Homeowners mortgage aid program has so far helped only a handful of homeowners, mainly because of onerous fees, tight restrictions on who can apply, and heavy reliance on the voluntary cooperation of lenders.

Fortunately, the need to address the program’s deficiencies is not lost on Congress or the White House.

The House Financial Services Committee this week approved a program revamp. The Obama administration, meanwhile, is developing its own initiatives for aiding borrowers that it expects to announce next week, according to an Associated Press story published on Wednesday.

The House’s revise and the White House plan, which is expected to feature $100 billion in financial bailout funds to help borrowers stay in their homes, are among the patchwork of programs being contemplated for the economic stimulus package. Another amendment, being worked on by moderates from both parties, Reuters reported, would drop spending criticized as ineffective and shift some of it to job-creating construction projects. It has the potential to significantly change the bill and might set the scene for more bipartisan support for the plan.

Senate Banking Committee Chairman Christopher Dodd also put the Senate on notice that he would try to use the bill to dedicate $50 billion from a separate financial industry bailout fund for home foreclosure mitigation. His amendment could be debated on Thursday.

The Senate, as we’ve been hearing all week, has been pushing a 10 percent tax credit, up to $15,000, on sales of new or existing homes – a measure heartily endorsed by groups such as the National Association of Home Builders.

The AP story points out that even though plans to assist homeowners likely will anger those who oppose subsidizing borrowers who may have acted irresponsibly, the Obama administration appears to agree that such action can help stem the financial crisis.

"We're not going to be able to eliminate all foreclosures, but can certainly keep that number from getting out of control," Robert Litan, a senior fellow at the liberal-leaning Brookings Institution, told the news service. By doing so, "you should be able to reduce some of the losses on the securities which are driving the banks under."

Foreclosure-specialist Web sites such as Foreclosure.com, RealtyTrac, and Yahoo Real Estate have, of course, been buzzing, and even proliferating. One of the new ones, ForeclosureOfTheDay.com, claims to present real estate listings “in a Web-friendly deal-of-the-day format.” A press release explains that the site was founded by “two conservative investors from Idaho who know that real estate investing remains the golden road to riches. The pair scours bank-owned properties and lists the very best foreclosure deal in the country each day.”

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Comments (4)

JiroV writes: Retail stores were one of the industries that took massive hits during the recession, and we saw the closing of some large chains like Circuit City. The retail year revolves around the Christmas season, or holiday season, and this holiday shopping season saw an increase in retail purchases, but the side effect is that January is almost a mini-recession for retail stores unto itself. That said, the numbers for the 2009 holiday shopping should be out soon, and we'll see if consumers were regaining confidence, or if they still could use payday loans.
Posted: 2:26 am on January 11th

rbourg557 writes: I just caught your comment on banks holding the money. You are right.... I am a Canadian investor and renovator. I bought a house that the bank had forclosed on. The last house I sold had a $80,000 morgage left owing,The the house sold for $132,000, the forclosure we bought was two properties fo $86,000. we put $20,000 down, leaving $66,ooo for the new morgage. We had to pay a penalty because the curent morgage was lower then the last one.. Then when it came time to start renovating the two properties we bought, the bank draged on for over three months. Only after threatning to change banks did they finally give us the money, By the way ...the preperty we bought was assesed at $130,000 for the first property and $25,000 for undeveloped second property. Now we are waiting again for the bank to pay the building company for the supplies used for the rebuild of house #1.The project is almost complete , it was a single ranch style and is now a two story, 1800 sq.ft ,build from the foundation up. It's appaised value will be around $235,000 when complete.So why are they being so slow at giving the suppliers the money. I think they are stingingit out because they know that the plan is to sell this house and develope the second property without their help. We will have enough cash left over to build second home. By the way the amount owing for materials is only $35,000.......Do the banks think we are all stupid and don't know what they are up to......hording and collecting interest for as long as they can.

Posted: 10:10 am on February 11th

Mycrow writes: Wow, my typing makes me look like I can't spell. Okay, instead of hey aren't loaning money it would be they aren't loaning money, and we need to stimulate job growth, I don't even know what groth is, maybe some ancient form of alcoholic beaverage.
Posted: 11:52 pm on February 7th

Mycrow writes: Giving the banks money isn't helping, I know for a fact that they receive the funds, and then sit on them. hey aren't loaning like they were supossed to. I also know of a bank that has greatly reduced spending on repairs so they will look like they are out of money so they can receive government funding. We need to take the money from the banks and put it in the consumers pockets, or to businesses to stimulate job groth.
Posted: 11:49 pm on February 7th

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