More Mortgage Mischief and ways to stall the recovery

Some days I think the Obamadmin is looking for ways to stall the recovery. Are his people against him, or are they helping him with his plan? It's too complicated to track his lies, which began even before his campaign. His treatment of the American people is like an abusive spouse. And the Democrats just keep coming back for more.

"The new federal Consumer Financial Protection Bureau's website proclaims that no financial company "should be able to build, or feel pressure to build, a business model around unfair, deceptive, or abusive practices." How ironic, then, that the bureau itself is trying to extend its reach by extorting billions of dollars from private mortgage servicers, regulating their business by fiat, and stalling a U.S. housing market recovery."

Review & Outlook: More Mortgage Mischief - WSJ.com

Obama Moves to worsen the housing mess

Haven't we been this route before? Didn't it lead to the bubble bursting in 2008? Did you know you can still get 100% financing, no money down, home mortgages (check out USDA--the food people--they also throw money at new mortgages). Now today we get the news that "The Obama administration on Friday announced broad new initiatives to help troubled homeowners, potentially refinancing millions of them into fresh government-backed mortgages with lower payments." Duh! 11,000,000 homeowners with property worth less than they owe, and the government continues to provide no-money down, 100% mortgage financing which is a 100% guarantee that the cycle will continue. Administration Moves to Assist Struggling Homeowners - NYTimes.com

Maybe we need a refresher on how our friendly government loan officer and enforcer got us here.

Housing program doesn't work so give them even more money

USAToday reported in October on a money black hole (under Bush and predecessors) so Obama has decided it just needs more money

Federal funding for a housing counseling program carried out by local non-profit groups such as ACORN has more than tripled since 2002, even though it has been criticized by government auditors for failing to show results.

President Obama's budget calls for a 54% increase next year — $100 million in all — for the program, which helps people buy or refinance a home, prevent a foreclosure or find rental housing. The Senate agreed, while the House of Representatives suggested $70 million; final negotiations over the bill are pending.

The Department of Housing and Urban Development (HUD) has been unable to provide much proof the program works, according to government reports, despite an increase in funding from $20 million in 2002 to $65 million last year." Link for details on the failures.

It's very hard to ever defund a "poverty" program, and even harder if it is for the "working family" or "low to moderate income" even if the program doesn't work. For instance, after forty plus years and billions of dollars for Head Start, studies show after a year or two in school, most gains are lost due to the children's home environment. It would be political death to NOT vote for the Head Start fantasy. Same with the "right to home ownership" dream which both parties claim and Bush really loved. At its worst it did nothing more than push already economically fragile people into debt beyond their wildest dreams; and at best, it funneled them into foreclosure workshops and refinancing failures. Either way, the agencies, groups, churches and nonprofits keep their own staff employed.

Yesterday it was announced that NeighborWorks America (created by Congress) received almost $5 million from HUD to provide training for housing counselors through its various agencies, so it would seem the first payouts are forthcoming.

"Today NeighborWorks America announced that it received $4,860,802 in funding from the U.S. Department of Housing and Urban Development, which will support training and certification opportunities for thousands of counselors from HUD-approved nonprofit counseling agencies, as well as nonprofit housing counseling at local NeighborWorks organizations. Link to details

It's a revolving door, but it keeps the staff of foundations, non-profits, churches, and government offices employed. With unemployment at the highest levels since Jimmy Carter days, now is hardly the time to hand out tax dollars to training classes for luring people into mortgages.

Fixing troubled mortgages for the elderly

Sometimes older is not wiser. It seems that Pedro Garcia, a retired corrections officer, refinanced the home he bought for $23,000 40 years ago for $490,000 with what is known as an exotic "option ARM." In 2009 the house was valued at $150,000. When his payments had balooned beyond his pension's monthly income he quit paying. Bank of America, under pressure from tax cheat Geithner to remedy these bad decisions and "predatory lending" when money was flowing, refinanced it for $85,000 and then gave him a reverse mortgage on that, so he is now paying nothing. Of course, he'd already used that refinancing money--$70,000 to fix up the house, medical bills for his ill wife, and monthly living expenses. I guess the bank just eats that. But he still has a small second mortgage, which has also been modified by that lender. Something like 500,000 borrowers have been rescued by Obama's $75,000,000,000 foreclosure prevention plan. (WSJ story here) According to the article, Mr. Garcia and others were misled by these predators and the ARMs they pushed. No mention in this article about the number of non-profit organizations (like ACORN) that worked with banks and pushed both subprimes and ARMs especially for minorities. 32% of option ARMs were in foreclosure or delinquent as of August, compared to 48% of subprime. The difference is the option ARM people were good credit risks, sensible and wiser. Go figure. Pot. Rainbow. Free money.

And we're still seeing schemes from the government to put people into more housing debt, this time it's Obama instead of the Bushes or Clinton. Earlier this week there was an article on the tax credit plan for first time buyers. Claims for the $8,000 tax credit might have significant fraud. What a surprise! This little goodie if it is extended, will cost the tax payers an additional $16.7 billion. The new proposed ceiling might be $300,000 income per couple instead of the current $150,000. Under the current stimulus plan we the tax payers pay $43,000 for each borrower who uses that $8,000 tax credit. If they raise the ceiling, each tax credit will cost us $250,000 per home sale. (WSJ story here) Folks, you all took second grade math. Does this make any sense to you?

Update: On April 3, 2008 Michelle Malkin exposed the housing counseling racket, deep within the Bush Administration: ". . . mortgage counseling is a thriving racket that benefits far Left groups ranging from the AARP to ACORN to La Raza and Legal Aid. The Department of Housing and Urban Development funds hundreds, if not thousands, of these groups across the country. In October, HUD announced more than $44 million in new housing counseling grants to over 400 state and local efforts. The White House has increased funding for housing counseling by 150 percent since taking office in 2001." http://michellemalkin.com/2008/04/03/the-left-wing-mortgage-counseling-racket/

But wait--she appears on Fox News from time to time, so it must not be reliable.

Imagine the health care wait

While we were filling our coffee cups, the man on disability told me that he had applied 7 months ago for a special mortgage refinancing program that was part of the stimulus. He has submitted mountains of documentation, he has good credit, his bank is behind him--it's the federal government that has poured sugar in the gas tank of an already sluggish bureaucracy. He laughed--"This is more time than it took for me to qualify for diability!" (and that was a number of months).

Also, at Ohio State there is a back log in providing military veterans their payments for tuition, books and living expenses under the post 9-11 GI Bill. That log jam apparently started to build up around May of 2009. This has affected tens of thousands of Iraq and Afghanistan veterans nationwide scrambling to cobble together enough money until the government payments come through.

There's only a few million veterans, and probably even fewer mortgages going through refinancing paper work. Aren't you just amazed at a president so ignorant of the red tape he's creating who wants to take over the entire health financing system instead of fixing what doesn't work--like the waste and fraud that are already in the government health programs?