Saturday, December 20, 2008

Foreclosure prevention programs are flopping

From Kathleen M. Howley at Bloomberg:

Foreclosure prevention programs supported by the Bush administration that rely on lenders to voluntarily modify mortgages are "flopping" by putting some borrowers further into debt, according to a new report.

Half of November's loan modifications increased monthly payments, and a similar amount added unpaid fees and interest to the loan principal, the National Association of Consumer Bankruptcy Attorneys said this week.

The modifications boosted mortgage balances by an average of $10,800, and only one-third resulted in lower monthly payments, according to the Washington-based group.

Government and the security it promises cannot solve every problem. And not that an absolute free market can solve every problem in the least painful manner, but...

The $7.3 trillion Bush Bailout of 2008 has already proven itself to be an immediate flop. And since Bush decided to inflate the money supply, the next year or two don't bode well either. Do any clear-thinking people believe the $17.4 billion automaker bailout is in the best interest of the taxpayer?

It's getting near the end of President Bush's term. By now, I figured he'd be busy signing pardons for Scooter Libby and his pals.

Tim White

UPDATE: Last night, Cheshire's Ironman beat me to the punch on this with an interesting piece over here.


Anonymous said...

Perhaps we should ask the chairman of the Banking Committee, Chris Dodd (D-Countrywide); why his pet programs are falling apart despite untold amounts of money being poured into them ?

tim white said...

I'm disgusted with all of them - Dodd, Frank, Bernanke, Paulson - but just didn't feel like repeating all their names in this post. The list is simply too long to type out all their names every time.

I'm still amazed that Dodd didn't drop Banking and take the Foreign Relations Chairmanship. But as then-Senator Bob Torricelli (Incumbent-North Korea) found out, you can catch some heat for taking campaign donations from overseas.

Chipmaker said...

This is no surprise. Banking Man always, always looks out for his own interests first; Banking Man is NOT altrustic (at a minimum, there's a tax writeoff buried somewhere in any apparently goodwill acts).

Voluntary programs like this FAIL, always. Without mandated actions, without requirements, without well-teethed sanctions for failure to comply, and without a working oversight mechanism, this sort of thing fails. Always has, always will.

Failure is, of course, a Bush hallmark, but this sort of thing is even bigger than his usual inky-red-handed prints can reach.