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Hoax Now Mortgage Refinance Program

April 16, 2009 – Comments (2)

Remember the fanfare and bombastic promises of the "Hope Now" Program pushed through congress by knee-jerker Barney Frank, and gummed up by everyone else in the Capitol Hill sausage factory?

It'll help hundreds of thousands of bagholders, up to 1.2 million, they claimed at the time. President Shrub, who, to be fair, probably couldn't be expected to understand why it wouldn't work  (not being a guy who could make higher than Cs in college, or read a newspaper...) praised it as an example of a public-private partnership that would make a difference.I figured this would be a dismal failure, but didn't reckon on just how big a failure it would be.

Now we know. Six months and hundreds of billions worth of (pledged) dollars later, Hope now has helped One (1) mortgage holder get an FHA guarantee. From NPR.

Last summer, Congress passed the Hope for Homeowners Act, setting aside $300 billion to help people refinance into more affordable mortgages. But the program has been a total flop. When it was first introduced, the Congressional Budget Office estimated that the program could help 400,000 people keep their homes.

But more than six months after the program was launched, the Federal Housing Administration says only one homeowner has made it all the way through the government program and received the FHA guarantee. Given that millions of people have slid into foreclosure, a startlingly small number have even applied. The FHA says it has only received 868 applications. Fifty-one of those have been finalized to some degree by lenders. And the FHA has only guaranteed one loan.

Barney Frank, of course, has some interesting remarks that show that he's not above telling a few lies in order to pass legislation that will make him look like a caring lawmaker, even if he suspects it will fail.

"The problem was when we passed it, and it's interesting how things have changed, we were under pressure from the right," he says. "Remember, it was the Bush administration. So to get it passed we had to dumb it down, which I regretted, but I thought it was better than nothing."

Better than nothing?

How is spending millions of dollars (the program setup cannot have cost less than that, I don't imagine, in time and dollars) alone, in order to get one mortgage changed, how can that possibly be better than nothing?

Sounds much worse than nothing to me, as clearly, the benefit cannot have been worth the cost -- except for the benefits accruing to lawmakers, who could tell their constituencies that they had done something to help them out, even if all they’d done was waste a big pile of money belonging to those constituents.

I don't suppose we can expect any better. And you could argue we certainly don't deserve any better. After all, we're the jokers who vote these people into office.

Sj