With midterm elections coming in November, and with the Democrats generally sailing against the political winds, reports about the difficulties and inadequacies of the Obama Administrations project “Making Home Affordable” (MHA) are likely to slacken further the party’s sails. The MHA program was set up in February 2009 as offering “opportunities to modify or refinance your mortgage to make your monthly payments more affordable. It also includes the Home Affordable Foreclosure Alternatives Program for homeowners who are interested in a short sale or deed-in-lieu of foreclosure.” Signs of challenges for it are evident on the website’s front page: a drive in July 2010 – 17 months into the program – “ of the Making Home Affordable Program.” Given the of the first half of 2009, advertising such a program might hardly seem necessary. Unfortunately, recent reports show that even for those who signed up for the flagship Home Affordable Modification Program (HAMP), rebounding mortgage payments and/or foreclosure loom over them on a month-to-month basis.
Though a series of reports have been make via a number of news outlets in recent days, we would direct your attention to Shahien Nasiripour’s and Arthur Delaney’s thorough study posted at TheHuffingtonPost.com. “In its first year, 1.5 million people were invited to try HAMP. About 40 percent of those who tried it have been kicked out of the program; fewer than that have been given an actual shot at keeping their homes. When President Obama took office, it took an average of 319 days to complete a foreclosure, according to Jacksonville, Fla.-based data provider Lender Processing Services. Now it takes 461 days.”
The report points out, though, that the extra 142 days (on average) to complete a foreclosure have had some positive effects both on the foreclosed and on the housing market generally. The families have almost five more months to find a new home, and the foreclosed house(s) take longer to get back on the market. Thus the free-fall on house prices was stopped, which gave some confidence to the housing market and to the economy generally. “Extending and pretending was the right thing to do last year ,” says John Burns, a housing industry consultant based in Irvine, California. Many might have found ways to improve their economic situations in a stabilizing economy during the extra few months they enjoyed before foreclosure proceedings began.
The Office of the Special Inspector General for the Troubled Asset Relief Program describes the HAMP funding and permanent restructuring of mortgages “anemic,” whereas Treasury officials have argued that the HAMP was just one piece of a larger strategy to stabilize the market and help slow foreclosures. Nasiripour’s and Delaney’s article interviews a number of people who entered the program and indeed saw improvements in their situations for many months – only to be removed from it and owe significant administrative fees and back-payments on mortgages.
HAMP claims some 389,198 permanently adjusted mortgages that have kept people in their homes. Paltry compared to the millions of ongoing foreclosures, but wonderful for those who have gained the adjustment (and for the neighbors who see fewer homes go vacant in their areas). For those who can not prove eligibility or who get trapped in the maze of paperwork to be filed with the MHA and with one’s mortgage provider, the delays in foreclosure can still be considered successes (according to lenders interviewed for the Huffington Post piece), because the process tampers down the ‘shadow inventory’ of homes waiting to go onto an already saturated market (Please see our posting for this Monday for a look at the ‘shadow inventory’ in the Washington DC area). Cold comfort for families involved in the process, to be sure.
Mark Hanson, a housing industry analyst based in California and often quoted in the article, is quite sanguine about HAMP’s opportunities. It remains underfunded to save significant numbers of homeowners, it allows foreclosure procedure to continue (even if the final papers are served comparatively later), and it leaves most subscribers in the continued state of anxiety month-to-month that deflates their opportunities to do the work that might expand their own economic opportunities and those of the nation.
The article presents a thorough and balanced account of the Home Affordable Foreclosure Alternatives Program, though the authors clearly believe that trouble still looms for the housing industry. In this election year, note how the candidates speak of the housing issue. Do they speak of larger statistics? The benefits of dampening the ‘shadow inventory’ of foreclosed houses? The opportunities of delay for families to find other arrangements? Or do they speak of individuals saved or harmed by such programs? The citizenry should be armed with the facts both parties will marshal, and then draw from them a truth to help inform them of their votes, or their efforts to help themselves and their neighbors during this Great Recession.