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Hope For Homeowners Blame Game Starts In Washington

by Peter G. Miller
December 22nd, 2008

Back in September, FDA Commission Brian Montgomery told Congress that HUD was going to spend $29.5 million to get the Hope for Homeowners program in gear. Specifically, said Montgomery, the money would be spent for “the Program’s start-up costs associated with outreach, personnel, contracting, and systems upgrades.”

Here’s what you got for your money.

Nothing. Nada. Zip. Zero. Goose Egg.

Hope for Homeowners was the program passed this summer that was supposed to help as many as 400,000 homeowners get FHA mortgages. The goals of the program’s supporters were pure, but the H4H program was a lousy concept from day one. That said, if you had the choice between a foreclosure and a less rotten loan, which would you take?

The issue with Hope for Homeowners was that it required lenders to take a loss on every loan refinanced under the program. Lenders, if they had any common sense, should want to participate because they are likely to have far bigger losses if a home goes to foreclosure.

As we have consistently reported, there have been NO Hope for Homeowner loans to date. Not one. While there have been several hundred applications HUD has not approved a single mortgage under the plan.

“What most people don’t understand is that this program was designed to the detail by Congress,” HUD Secretary Steve Preston told the Washington Post. “Congress dotted the i’s and crossed the t’s for us, and unfortunately it has made this program tough to use.”

“That’s partly their fault,” Rep. Barney Frank (D-MA), chairman of the House Financial Services Committee, told the Post. “The administration was critical of the program and kept putting pressure on us to make it cheaper and more restrictive…If it hadn’t been for the Bush administration’s opposition, we would have written it in a better way in the first place.”

You might have some sympathy for Preston except that, first, the Bush Administration threatened to veto FHA reform; second, HUD has done a lousy job with the FHA Secure program, allowing just 3,794 delinquent conventional borrowers in the simple-and-easy program’s first year to refinance with FHA mortgages. This year it’s doing worse — in the two-month period between October 1st and November 30 it has allowed just 171 delinquent conventional borrowers to refinance.

In case anyone hasn’t noticed — and despite a number of state-wide foreclosure moratoriums as well as temporary moratoriums with Fannie Mae and Freddie Mac — foreclosures continue to be a massive national problem. RealtyTrac reports that in November 259,000 foreclosure notices went out — that’s more than 8,600 a day, every day.

For the full story from the Post, see HUD Chief Calls Aid on Mortgages A Failure

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This entry was posted on Monday, December 22nd, 2008 at 3:11 am and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

One Response to “Hope For Homeowners Blame Game Starts In Washington”

  1. JASAM FOREVER Says:

    problem is your payment isnt much lower a month than the existing loan, due to if you have debt or bad credit, its 7.5 %
    so its great they lower the principle, but your monthly payment into their loan doesnt change much from an interest only loan, and it still goes up when your property values go up due to property taxes!! were walking! I thought the whole purpose was for relief, i would rather have the same principle and just lower payments a month

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