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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.


2 Comments – Post Your Own

#1) On April 16, 2009 at 11:27 AM, saunafool (< 20) wrote:

The problem as you are well aware is that they cannot simply bail out people who paid too much and are now way under water. They cannot bail out people who put no money down. They cannot bail out people who could never afford the house they bought.

That eliminates about 60% of the buyers in the past 6 years or so and probably about 90% of the people going into foreclosure.

The thing that hacks me off is that no one seems to get it. They don't see that it is plain and simple easy credit (and I'm not talking about low interest rates; I'm talking about not verifying incomes) that create the mess. 

They can't have prices stop going down until all the false appreciation is wrung out of the system.

Of course, you know that. I'm just hacked off because none of the hacks in Washington seem to know it.

If it weren't American tax money being wasted, it would be pretty comical, though. 1 mortgage modified. Heckuva job Brownie.

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#2) On April 16, 2009 at 5:23 PM, Melaschasm (< 20) wrote:

To make this even worse, I do not expect to see any of the $300 billion returned to tax payers.  In 5 to 10 years we will have lost the entire $300 billion and only helped a few hundred people refinance their loans.

Even if this program was a success, it would still be a terrible waste of money.  If we had helped 1 million people (Barney's estimate) with their mortgages, the cost of the help per person would have been $300,000.

Or if we actually wanted to help people, the government could have paid down $7,000 of the first mortgage of every citizen who has at least one mortgage.

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