The mortgage bubble that Wall Street players were puffing up and were betting would break has, of course, brought down almost everything else with it (save investor bonuses). The fallout was one of the many catalysts for the sweeping political change of the elections of 2008. One of the loudest political debates was over whether federal recovery and stimulus money should go to banks andhouses who could not expect repayment on their loans or to homeowners whose hastily purchased and heavily leveraged houses were suddenly underwater. Though the debate continues, many of us seem already to have accepted the inevitable: banks and investment houses have lobbyists, home owners have bills. But some efforts to improve the situation on the ground can be found.
The New York Times is reporting that in February some 168,000 mortgages have been readjusted in the wake of the collapse of the housing market. These numbers compare with some 67,000 last December. One can ask whether such numbers can be discussed as a cup-half-full or half-empty, but at least the cup is filling. Then again, the cup is trying to bail against a tide of foreclosures that hit over 937,000 homes in the third quarter of 2009 alone. The Times article cites some 6,000,000 homeowners within danger of foreclosure, although supporters of the Treasury’s efforts point out that what constitutes a ‘danger of foreclosure’ is terribly fluid. Many who were in a panic a year ago might find that they do not need federal assistance now.
Of course, the opposite can also be true, as the unemployment rate still hovers near 10% and anyone on the brink of losing a job or seeing their business falter will quickly find themselves within any definition of that ‘danger.’ Moreover, the Times article points to skeptics like Alan M. White, an assistant professor at Valparaiso University School of Law, who is non-plussed with even the claimed expansion of the homeowner assistance program:
Although 66 percent of them have made all their payments, fewer than 25 percent have been converted to permanent modifications … They are making payments but remaining in limbo or, worse, having their modifications canceled for lack of paperwork.
We shall keep an eye on how the program continues with its assistance over the next quarter and, perhaps more importantly, over the next political cycle of the mid-term elections.