Of all the news I’ve heard or read myself about our failing economy, this makes me the saddest. Also, I admit this is my biggest wake up call to the seriousness of our economy’s depression. HOPE was the promise Obama made to his supporters. His intentions were strong, bright, and energetic but have dimmed with the shortfalls of his efforts to help the economy; specifically the housing market. It has been said another recession is around the corner if Obama and Congress cannot strengthen the housing market or create more jobs. I believe it will be sooner than later that we see another recession due to increasingly faint progress.
The most critical choices in helping the housing market were strongly influenced by Treasury Secretary Timothy F. Geithner and Secretary of Housing and Urban Development Shaun Donovan, claiming the market would only benefit from homeowners who had good credit because it would mean secure payments in the future if their monthly debt was reduced. That’s a logical assumption; however, homeowners who needed the most help are not currently in good credit and are unable to pay their mortgage every month. Currently, the Obama’s administration programs has permanently reduced one tenth of one percent of underwater borrowers debt. That percentage is ridiculous.
The HARP (Home Affordable Refinance Program) created by the Obama administration, intended to help underwater homeowners (people who owe more than their house is worth) with reducing their mortgage payments to avoid foreclosure. The argument for the program made by Obama’s chief advisors, Treasury Secretary Timothy F. Geithner, and Secretary of Housing and Urban development, Shaun Donovan was that under this new program 11 million homeowners would be helped by the banks who received federal bailouts. Sadly, only 70,000 were assisted while 2.5 million homeowners foreclosed. After a revamp of the program, Obama decided to ask banks to forgive a percentage of homeowner’s debt without paying any additional taxpayer money to help cover the bank’s loss. In 2009 Obama originally supported a bill which would enable homeowners to have more power against banks in court which was said to force banks to reduce mortgage payments, but Timothy Geithner strongly advised against it stating, “If he had an extra $100 billion more to spend, he would never advise spending it on housing.” Obama decided to pass on the bill when it came time to vote on it in Congress.
Since then statistics of how little the HARP program has helped, Obama asked his administration to work harder on solving the mortgage crises. Currently, a $25 million settlement with banks over foreclosure abuses will be paid by reducing borrower’s debt. This settlement is almost at end with its process. Despite the new efforts on Obama’s behalf, there were many opportunities for him to be more aggressive in fueling the housing market. Aware of how little HARP has helped Americans, he could easily demand banks to follow executive orders and reduce their borrower’s debt. Obama and his administration were aggravated by warnings from a former Bush administration FHFA (Federal Housing Finance Agency) director James Lockhart who said any money spent on the mortgage crisis would save money. Instead of bending to the warnings, they listened to the new FHFA director, Edward DeMarco, who was eager to control the largest mortgage owners, Fannie May and Freddie Mac. An official and confidential letter from DeMarco addressed to Donovan in 2011 stated he would not allow Fannie May and Freddie Mac to endure losses in their loans unless of course Congress used taxpayer money to help cover the loss. It was too late for that idea because Congress had then voted against new uses of funds.
Everyone reading my blog knows of somebody in a mortgage struggle. The news of banks needing the tax money of their current borrowers to cover the loss of the same borrower’s reduced mortgage payment is sickening. You can relate to my disgust and will tell somebody about this depressing news. Students, parents, the employed and the unemployed all of you know the importance of the failure of HARP. It is common knowledge that we need to ask Congress for change. Write your representative here https://writerep.house.gov/writerep/welcome.shtml. Tell them how home loss and financial trouble is killing our communities. Ask more of Congress in reducing mortgage debt for all homeowners.
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