Contact Us

Visit our website at OR contact our Massachusetts office at 508-499-3366 or our Rhode Island office at 401-250-5520.

Wednesday, March 17, 2010

Moving target: Goal for foreclosure aid in dispute

Moving target: Goal for foreclosure aid in dispute

Wednesday, March 17, 2010; 3:52 PM
WASHINGTON -- Last year, the message was clear. Now it is murky.
When President Barack Obama first announced a sweeping effort to combat foreclosures in February 2009, he said the program would "enable as many as 3 to 4 million homeowners to modify the terms of their mortgages."
Shaun Donovan, the administration's housing secretary, echoed with the claim the plan "does a number of things to make sure that up to 3 to 4 million families can stay in their homes and have affordable mortgages."
Now, with only 170,000 successful cases a year later, administration officials are backpedaling. They say the plan is on track to offer - note the word "offer" - help to those millions. By that measure, the program has already reached 1.3 million of them.
But the new spin is drawing ire from some on Capitol Hill. Republican Reps. Darrell Issa and Jim Jordan sent a letter to Treasury Secretary Timothy Geithner on Wednesday accusing Obama officials of distorting the numbers.
"If Treasury is to regain the confidence of the American people, it must become more candid about the success or failure of its policies," they wrote.
The program is designed to lower borrowers' monthly payments by reducing mortgage rates to as low as 2 percent for five years and extending loan terms up to 40 years. The government has set aside $75 billion in subsidies to entice mortgage companies to participate. More than 100 have signed up.
To complete the program, homeowners need to make three payments and provide proof of their income, plus a letter documenting their financial hardship.
But getting banks and homeowners to complete the process has been far more difficult than administration officials anticipated. About 90,000 homeowners have fallen out already, and hundreds of thousands more are likely to be disqualified this year.
Officials actually made a quiet tweak to Obama's message weeks after his initial speech. The word "offer" made its first appearance on March 4, 2009 when the Treasury Department released details of the program.
A fact sheet issued at the time says the plan would "offer reduced monthly payments for up to 3 to 4 million at-risk homeowners."
Michael Barr, an assistant Treasury secretary, says he has consistently used this language in interviews with reporters for the past year. "When we said we would reach 3 to 4 million people, we didn't say all of them were going to succeed," he said in an interview last month.
And Meg Reilly, a Treasury spokesman, said Wednesday that Obama's original remarks were consistent with the goal of offering help to millions. At that time, details of the program were still being hammered out and there was no distinction between offers of help and permanent modifications.
This kind of hairsplitting irks Thomas Lawler, an independent housing economist.
Merely offering help, he said, is "not what the president meant," he said. "That's not what anybody meant. Just stop it."
Obama officials would be better off acknowledging the program's flaws and moving on, he said. Plus, he argued, offers of help are a poor way to measure results.
"Nobody cares about offering something that people don't qualify for," Lawler said. "What's the point?"

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.