The Treasury Department has shifted their thinking on HAMP, their tentpole foreclosure mitigation program. Despite initial estimates of the program being able to keep 3 million people in their homes (to date, just 400,000 have been approved for a permanent loan modification, with only .1% of those actually getting the kind of principal reduction that can really make a difference), Treasury now says that the goal was to delay foreclosures so the market could better absorb the glut of vacant homes, and prices would remain somewhat stable. Treasury claims they couldn’t justify spending the amount necessary to keep borrowers in their homes; however, just $250 million of an earmarked $75 billion has been spent on the program, according to the Special Inspector General for TARP ($50 billion of the $75 billion for HAMP is supposed to come from TARP, with the rest from Fannie and Freddie).
John told me about a house that the owners have been evicted from in 2009 just going on the market more than a year later. The bank was just letting it sit there. There's a lot of pretending going on.
All along, this ahs been about assisting the banks and lenders, plus trying to artificially prop-up the real-estate prices. It's never been something designed to help the average American who was up-side-down on their house.
Of course, I never thought anyone should have been saved from losing their house, but it's pretty fucking funny to see that the whole point of the thing has been to help the banks. If people were getting booted out of their houses by the hundreds of thousands, the banks should have been getting kicked in the balls too. But that's not how it work in the American system.
And, of course, this is yet another reason why Obama is a terrible President.
The conversation next turned to housing and HAMP. On HAMP, officials were surprisingly candid. The program has gotten a lot of bad press in terms of its Kafka-esque qualification process and its limited success in generating mortgage modifications under which families become able and willing to pay their debt. Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least. There were murmurs among the bloggers of “extend and pretend”, but I don’t think that’s quite right. This was extend-and-don’t-even-bother-to-pretend. The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks. Policymakers openly judged HAMP to be a qualified success because it helped banks muddle through what might have been a fatal shock. I believe these policymakers conflate, in full sincerity, incumbent financial institutions with “the system”, “the economy”, and “ordinary Americans”. Treasury officials are not cruel people. I’m sure they would have preferred if the program had worked out better for homeowners as well. But they have larger concerns, and from their perspective, HAMP has helped to address those.
Oh.. and by the way.. I keep encouraging people to do what they need to, to make a bunch of money.. so you'll be okay when the American standard of living crumbles. You, of course, have to do this on your own. The very wealthiest in this nation have government assistance programs that are designed to make sure that they are always okay.
The reason why that is.. is because it's true that the very wealthy in this nation (as a class) drive the economy. If they're fucked.. you get 1930's style economics.
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