May 22nd, 2009
07:54 PM ET

Analysts: Tweaks may not save Congress’ failed foreclosure fix

Alexandra Andrews

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.


Filed under: 360° Radar
soundoff (11 Responses)
  1. Falcon

    So much has happened. I complete loan modifications for friends, and let me tell you that it is a lot of work to get loans modified. I still see homeowners losing their homes to foreclosure. One company called Ocwen, actually can estimate how much a foreclosure actually costs a bank. It is in the thousands of dollars range. Still banks continue to foreclose and rack up attorney fees.

    But who is regulating the bank. Recently, I heard that WellsFargo foreclosed erroneously on a homeowner. If that homeowner did not threaten to sue the information might have never been disputed. I think banks are pulling the unthinkable during the loan modification. Banks like WellsFargo continue to foreclose on homes during loan modification – where is the Home Affordability Act in that??

    May 25, 2009 at 9:35 pm |
  2. anthony bozeman cleveland ohio

    This govt has created this housing problem when they don't think and they just reacted to a problem we the people always pay the price. Increasing homeownership sound great at the time but as we found out it was not well thought out..

    May 24, 2009 at 4:08 pm |
  3. anthony bozeman cleveland ohio

    this goverment is throwing money at problems and hoping and praying it works. We need to stop and find out which program is working and which one they need to scrap. Stop the madness for it is to late.

    May 24, 2009 at 3:57 pm |
  4. J.V.Hodgson

    I hope the improvements work, what I do not understand is why the banks are not contacting potential beneficiaries of this since to do so has two effects:-
    1) The borrower and the bank get something.
    2) If foreclosures are reduced, then property values may stop falling ( as quicky and that would be beneficial again to banks and many more borrowers than the 400,000 this bill and improvements is aimed at helping.

    May 24, 2009 at 12:58 am |
  5. Ian

    Here's a novel approach ... how about the government getting OUT of the free markets altogether and letting everything work itself out.

    Irresponsible lenders will go under. Irresponsible borrowers will go bankrupt. And life will go on ......

    Instead we're working triple overtime and spending money that belong's to our children's children to bail out the crooks, the greedy, and just plain stupid.

    To whom does this actually make sense???

    May 23, 2009 at 2:17 pm |
  6. Eunice

    Is anyone concerned about the fact that consumers can no longer see their actual Experian FICO scores which all lenders use to decide creditworthiness? If bankers and lenders are using it we should also have access to it , not a FAKO score that Experian makes up. Its unfair, Obama should also address this issue which is in line with credit reform.

    May 23, 2009 at 5:43 am |
  7. Kimberley

    Are you seriously complaining about the Attempts to save our economy since January? Do you realize that we are only midway through May! Americans are rediculous. It took us years of greed to get into this mess and now you want an instant result? Buck up! Take off your coat and hat cause it's gonna be a while. But I do agree that those banks seem to be keeping all of the benefits to themselves and not passing them to the lender.

    May 23, 2009 at 4:15 am |
  8. Michael C. McHugh

    Somehow, I think a president like FDR would have made sure that more than one person got help in a crisis like this. It's not acceptable. It's inexcusable in a situation when big banks are getting trillions of dollars that virtually nothing is being done to help ordinary homeowners. It's a fraud on the American people, although it's certainly more proof–as if any more were needed–about who is really running the show in this country.

    May 23, 2009 at 12:21 am |
  9. Susan

    They need to make it work!! This would be a great benefit and an additional solution to the extraordinary high inventory. People do not want to leave their homes!!! It is a very small price for the banks to pay.....the earn the respect of a life long client, not to mention that it would be less of a loss for the banks. Get it together Mr. Banker!!!!

    May 22, 2009 at 10:33 pm |
  10. Annie Kate

    I'm unfortunately not surprised that this program is not working. With all the financial fixes that were put in place in January you don't hear much about results even yet. Houses are still being foreclosed on; people are still losing their jobs; banks are not loaning money very much; hardly any jobs have been created, etc. When do any of those programs we threw so much money at that we will be paying off the rest of our lives and our children's lives have any results? The foreclosure bill is just the tip of the iceberg – I don't see results from any of the fixes. I think we had all hoped that on the foreclosures at least that the program would decrease the number of houses being foreclosed on and that a lot more than 1 person would be benefited. Sorry performance all around on this bill and I doubt the fixes Congress is putting in will help.

    May 22, 2009 at 9:28 pm |
  11. Marie

    I'm not too certain about this strategy. Definitely, something needs to be done and I feel that homeowners should be helped. It seems to me that once the President signs off on a bill, the program goes into the "pipeline" and then there are too many hands in the pot, so to speak. Maybe the allocation of funds would be best handled through each state's government. I have a real bad feeling that someone, somewhere, in some company is getting mightly wealthy off this program.

    May 22, 2009 at 9:08 pm |