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Mar-07-2011 11:55
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GOP Says No To Distressed Homeowners and Consumers
Ralph E. Stone Salem-News.comThe legislation to kill these programs is likely to pass the House, but its fate in the Senate is uncertain.
 Salem-News.com |
(SAN FRANCISCO) - Republican members of the U.S. House of Representatives are trying to terminate funds for foreclosure-prevention programs that help families fend off foreclosure and trying to strip the Consumer Financial Protection Bureau of its funding before it even opens its doors.
The Home Affordable Modification Program (HAMP) has helped about half a million homeowners remain in their homes, while another eight million families are at risk of losing their homes. HAMP's aim is to reduce borrowers' monthly payments to affordable levels. When it was launched in March 2009, the administration projected that it would prevent 3 million to 4 million foreclosures before it expired in December 2012.
The program has permanently modified about 521,000 mortgages as of December. But Republican lawmakers say the results are not worth the costs.
As of February, the program had disbursed $1.04 billion in incentive payments to mortgage servicers that permanently modified loans. The Treasury Department had initially set aside $75 billion for the initiative.
Some of that money was allocated to other housing programs that are also targeted for termination. About $8.1 billion was set aside to enable certain borrowers who are current on their mortgage to refinance into Federal Housing Administration loans if their homes are worth less than what is owed on the mortgage. About 44 loans have been closed under that program. Another $7.6 billion was reallocated to emergency mortgage relief payments to unemployed workers in some states. The other targeted program helps communities buy and redevelop foreclosed properties.
The Obama administration and consumer advocates argue that ending the program's funding would destabilize a fragile housing market as foreclosures continue to mount. On March 1, Timothy G. Massad, the Treasury Department's acting assistant secretary for financial stability, said, "Ending HAMP now, without a meaningful alternative in place, would mean that struggling homeowners would have far fewer ways of coping with the worst housing crisis in generations."
If something is wrong with the programs, fix them, don't just throw them out.
The legislation to kill these programs is likely to pass the House, but its fate in the Senate is uncertain.
House members are also trying to strip the Consumer Financial Protection Bureau (CFPB) of its funding before it even opens its doors. The independent CFPB is within the Federal Reserve and was created to prevent the kind of unsafe, predatory lending practices that gave rise to the subprime crisis and resulted in millions of Americans losing their homes to foreclosure. The central mission of the CFPB is to make markets for consumer financial products and services work for Americans—whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products. The CFPB won't officially start exercising its rule-making power until July 21.
The CFPB will provide financial education to inform consumers about abusive practices. It will supervise banks, credit unions, and financial companies, and it will enforce Federal consumer financial laws. The CFPB will also gather and analyze available information to better understand consumers, financial services providers, and consumer financial markets.
What the House Republicans plan to do is strip federal salaries from Elizabeth Warren -- expected to be nominated CFPB director -- and 24 other top administration officials from drawing a salary. That would technically render them unable to continue working for the government.
The House GOP budget plan already includes language that would cut the CFPB's current funding nearly in half, to $80 million. In a failed effort to restore the CFPB funding, Rep. Rush Holt (D-N.J.) argued, "[The Republican plan] handcuffs the CFPB to protect big banks that hurt American consumer interests."
The public, including homeowners, helped bailout the banks in their time of need even though they helped create the financial crisis that caused mass foreclosures. Now a handful of House Republicans are turning their backs on American families. We need more, not less, regulation and oversight of financial institutions and the financial marketplace.
We can make a difference by contacting our U.S. Senators urging them to preserve help for struggling homeowners and a strong, independent CFPB.
Salem-News.com writer Ralph E. Stone was born in Massachusetts. He is a graduate of both Middlebury College and Suffolk Law School. We are very fortunate to have this writer's talents in this troubling world; Ralph has an eye for detail that others miss. As is the case with many Salem-News.com writers, Ralph is an American Veteran who served in war. Ralph served his nation after college as a U.S. Army officer during the Vietnam war. After Vietnam, he went on to have a career with the Federal Trade Commission as an Attorney specializing in Consumer and Antitrust Law. Over the years, Ralph has traveled extensively with his wife Judi, taking in data from all over the world, which today adds to his collective knowledge about extremely important subjects like the economy and taxation. You can send Ralph an email at this address stonere@earthlink.net
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stephen March 9, 2011 12:15 pm (Pacific time)
my apologies from my posts. I get a bit frustrated, and and going to not post for awhile. Of course this article has some truth, I do the research, but it only takes a slight bit of ommisson to turn truth into a poison. Both left/right are bought and paid for, same with greenpeace, unions, whatever. The elite/bankers/globalists, whatever ya want to call them, own everything. And until people learn who these people are, and what they are doing, we will be on the hampster wheel to hell. Again, my apologies, I will take a break for awhile.. I knew to prepare for this many years ago, so financially set no matter what. But I cant prepare for the ignorance as people dont understand the overall picture of complete evil domination by the very evil elite. I'll be back in a week or two, but my frustration is making my comments unacceptable. Thanks for putting up with me.
Hank Ruark March 8, 2011 8:13 pm (Pacific time)
To all: Careful reading and fact-check on the Comments only emphasizes the impact of mis-and-dis-information to which they react. Ralph's story is accurate, checkable on fact and statement, for those who are willing to seek the truth. Comments here and elsewhere by some of same persons prove up the very damaging understandings and attitude change reported in my three-part Op Ed now underway. If those commenting have checkable fact, let them disclose it here, with source for "see with own eyes" by the serious reader seeking solid information from serious S-N writers.
Anonymous March 8, 2011 7:20 pm (Pacific time)
how about clinton, who supported the bush sr agenda, supported NAFTA that sent all our jobs overseas, and spent the baby boomer social security money to balance the budget? Anyone, and I mean ANOYONE, who is for or against the left/right parties, is ignorant. Look who is in every admin..all the same people..wake up
Ralph E. Stone March 8, 2011 8:39 am (Pacific time)
I suggest that critics of foreclosure-prevention programs do their homework. First, I recommend reading the conclusions of the financial inquiry commission. Among its conclusions is that the financial crisis of 2008 could have been avoided. The warning signs were not acted on by Wall Street and the Bush administration regulators had provided proper oversight and acted. The Republicans, of course, discount the inquiry commission's conclusion because it correctly places much of the blame on the Bush Administration's penchant for deregulation. The financial institutions which were considered to big to fail received bailouts. But none of these institutions or their executives were prosecuted. Now we have a blame the victims mentality at work. Unemployment and massive foreclosures were caused by others but the victims of the financial shenanigans got away scot free. The foreclosure-prevention programs relied on financial institutions to use the money to help their mortgagees. That they did not use the money is largely the cause of failure to prevent 3 million to 4 million foreclosures. I also recommend seeing "Inside Job," the Oscar best documentary award winner. The irony is that the foxes are still in charge of the hen house and a disinformation campaign is at work to cut programs to help the innocent victims of the financial debacle. There is a mean-spiritedness at work in this country.
Onpoint March 8, 2011 3:31 am (Pacific time)
Throwing money at two misdadventures that have drained our resources only to enrich the very few is causing tremendous pressure on money policy in this country. We go able to pay BILLIONS to improve roads, build power grids in Pakistan but NOTHING for the states. So plug up the biggest sinkhole draining our resources.
Luke Easter March 7, 2011 5:23 pm (Pacific time)
LOBBYISTS! And these banks funnel millions through pet projects of family members who reside on the HILL so to hell with the valley.
Iska Waran March 7, 2011 3:36 pm (Pacific time)
Good job GOP, then! $1.04 billion for 521,000 loans works out to $2,000 each. No rational person could think that banks are modifying loans in order to get a lousy $2,000 each. They're modifying loans only after concluding that modifying the loan is the best consequence for the bank. Either the bank is conceding a lot of money because they think they'll be better off than foreclosing or they're conceding very little. In either case, $2,000 per home is almost inconsequential to the bank. It's a mere $2,000 accounting entry in a bank calculation that usually involves at least tens of thousands of dollars. And it's inefficient because of the federal cost of managing the program (unless of course you're a Krugmanesque devotee of the broken window fallacy). To put it in terms that are understandable to you liberals: This program is a $2,000/transaction federal gift to banks that would in most cases have modified the loans anyway. For that we want to borrow more money from China and Saudi Arabia?
Martin March 7, 2011 12:25 pm (Pacific time)
The situation we have is dire. We are spending more than we have coming in. The dollar is being devalued more each day, which means that besides inflation and higher and higher energy costs, our money also is getting dinged in terms of purchasing power. So where do we make the cuts? No one is going to be happy when the cuts impact them, but if our dollar continues to decline, game over. The Obama policies have failed, the democratic congress policies have failed, so now we have some leaders who say let's follow previous policies that have been known to work. Giving money out that we do not have just prolongs the endgame. Better to get use to limited government handouts now, because that's the way we're going to be rolling for the immediate future. We're broke people...
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