Wednesday, June 3, 2009

More Broken Promises

Hope Now seemed to be a bust. Now we have an new housing plan. This one will modify mortgages using many of the same lenders that brought us on the brink in the first place. We have heard that there is little to no write-downs. The push for refinancing - the source of many fees - seems to be the lenders biggest push. But where does that leave the people in trouble. Foreclosures up. People still underwater. Loans spread out or having delinquent payments added on the back end. The taxpayers are losing. The homeowners are losing. The government is losing. The only winner with the latest housing plan seems to be the lenders (and perhaps the few new government hires that run the program). This article from the New York Times titled Promised Help is Elusive For Some Homeowners gives a perfect example. Let's take a look -

[W]hen Eileen Ulery called her mortgage company — Countrywide, now part of Bank of America — the bank did not offer to alter her mortgage. Rather, the bank tried to sell her a new loan with a slightly lower monthly payment while asking her to pay $13,000 toward the principal and a fresh $5,000 in fees.


Through many months of wrangling over the fate of the financial system, with hundreds of billions of taxpayer dollars dispensed on bailouts, distressed homeowners have waited for their own rescue amid talk that it was finally on the way. Modifications of so-called subprime and Alt-A mortgages — those made to people with tarnished credit — actually fell by 11 percent in May from April, according to research by Alan M. White at Valparaiso University School of Law.


Far from being one of those who used easy-money loans to speculate on homes proliferating across the desert soil of greater Phoenix, she has lived in the same modest, stucco-sided condo in suburban Mesa for a dozen years. She bought the two-bedroom home in 1997 for $77,500.


Like tens of millions of other American homeowners, she added to her mortgage balance as the value of her condo swelled, at one point exceeding $200,000. She refinanced to pay off some credit cards and settle into a 30-year, fixed-rate loan. Later, she took out a home equity line of credit to buy a new Hyundai. She refinanced again in 2007, borrowing $20,000, mostly for a new roof.


Ms. Ulery is among that unhappy cohort — her house is worth about $122,000, and she owes $143,000 — but walking away is not for her.


To which she poses her own question: What sort of deal is it for the American taxpayer? As she sees it, the same banks that generated the mortgage crisis are now getting public money to fix it, while doing little more than seeking new fees.

“I don’t think the government gets it,” she said. “These are the same people you couldn’t trust before.”

Perfect closing line! It does seem to be the same way looking from this direction in Jersey as well. Is this another housing plan going bust?

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