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Obama Administration Doing A "Heckuva Job" On Foreclosure Crisis

By Big Tent Democrat

Jeralyn pointed out that President Obama praised Larry Summers for "doing a heckuva job." More such praise is due to his team working on the foreclosure crisis:

Revelations about paperwork shortcuts and so-called robo-signed affidavits, as well as the likelihood of protracted legal battles by homeowners and inquiries by state and federal officials, will hinder foreclosure proceedings and discourage prospective buyers, a Treasury Department official said. “Together, these two factors may exert downward pressure on overall housing prices both in the short and long run,” said the official, Phyllis R. Caldwell, chief of the homeownership preservation office at the Treasury.

The administration’s testimony did little to soothe members of the Congressional Oversight Panel overseeing the Troubled Asset Relief Program, the 2008 bailout, who said the bungled foreclosures could set back the nation’s fragile economic recovery. “If investors lose confidence in the ability of banks to document their ownership of mortgages, the financial industry could suffer staggering losses,” the panel’s chairman, Senator Edward E. Kaufman, Democrat of Delaware, told Ms. Caldwell. “The possibility is especially alarming, coming so soon after taxpayers spent billions of dollars to bail out these very same institutions.” Another panel member, Richard H. Neiman, the New York State banking superintendent, asked, “How do we continue to look homeowners in the eye and ask them to continue to work with their servicers given the latest news pertaining to faulty documents and fraudulent affidavits?

Indeed, the Treasury official's testimony is utterly nonsensical. As I discussed before, the Obama Administration is making no sense regarding foreclosures:

Dean Baker fisks this WaPo "news" article:

The Washington Post appears to have outdone itself in a discussion of the politics surrounding the foreclosure crisis. For beginners, it told readers that:

[. . . T]he White House, which is looking past the midterm elections, has been restrained. Housing and Urban Development Secretary Shaun Donovan wrote over the weekend that 'a national, blanket moratorium on all foreclosure sales would do far more harm than good, hurting homeowners and home buyers alike.'"

Okay, it's fun with logic time. Secretary Donovan wants more foreclosures, presumably to further depress prices. [. . .] If Donovan thinks it is good to speed up the foreclosure process then why is the administration pushing HAMP? [. . .] That may make sense to the Washington Post, but probably not to anyone else. [. . .] The article then gives us a quote from a Democratic consultant without a name: "But shutting down foreclosures has the potential of shutting down the whole housing market, which isn't helpful to anybody."

Let's see, we have how many hundreds of thousands of homes that non-foreclosed sellers are putting on the market each month, plus a backlog of several hundred thousand foreclosed homes already in the banks' possession. How exactly does a moratorium on foreclosures shut down the whole housing market?

Of course it doesn't. But the cloud on titles to homes does. The Obama Administration wants to sweep reality under the rug.

And the incompetence starts at the top. Here is what President Obama said yesterday:

Q. I was wondering if you’re happy with the federal response to the foreclosure crisis or if you think there’s more that either should have been or could be in the future done either through HAMP or Fannie and Freddie or various mechanisms?

THE PRESIDENT: I don’t think I’m happy with millions of foreclosures or millions of houses being underwater. This is -- this was both a powerful symptom as well as a cause of the economic crisis that we’re in. So we’ve got to do as much as we can to stabilize the housing market.

I do think that the steps that we’ve taken helped stabilize the housing market. The HAMP program has gotten a lot of criticism, but the fact of the matter is, is that you’ve got half a million people who have gone through permanent loan modifications that are saving 500 bucks a month. And I get letters every day from people whose homes were saved as a consequence of it.

I think that the broader steps we took to stabilize the economy mean that housing prices are not plummeting the way they were. But this is a multitrillion-dollar market and a multitrillion-dollar problem. And the challenge that we’ve had is we’ve got only so much gravel and we’ve got a really big pothole. We can’t magically sort of fix a decline in home values that’s so severe in some markets that people are $100,000 to $150,000 underwater.

What we can do is to try to create sort of essentially bridge programs that help people stabilize, refinance where they can, and in some cases not just get pummeled if they decide that they want to move.

I think that we have tinkered with the HAMP program as we get more information to figure out can we do this better, can we do this smarter with the resources that we have.

The biggest challenge is how do you make sure that you are helping those who really deserve help and if they get some temporary help can get back on their feet, make their payments and move forward and stay in their home, versus either people who are speculators, own second homes that they really couldn’t afford because they’d gotten a subprime loan, and people who through no fault of their own just can’t afford their house anymore because of the change in housing values or their incomes don’t support it.And we’re always trying to find that sweet spot to use as much of the money that we have available to us to help those who can be helped, without wasting that money on folks who don’t deserve help. And that’s a tough balance to strike.

Complete horsesh*t. That said, the President is right when he says:

[I]nitially a lot of the problems on the foreclosure front had to do with balloon payments people didn’t see coming, adjustable rate mortgages that people didn’t clearly understand, predatory lending scams that were taking place -- now the biggest driver of foreclosure is unemployment. And so the single most important thing I can do for the housing market is actually improve economic growth as a whole. If we can get the economy moving stronger, if we can drive the unemployment rate down, that will have probably the biggest impact on foreclosures, as well as housing prices, as just about anything.

The problem is the President does not have any actual policies in place to help create jobs. His stimulus was badly inadequate and now with the GOP likely to take the Congress, he surely is not going to get anything new to address the problem.

In the first 100 days President Obama and his team failed on the economy by not doing enough. And there will likely not be a second chance for him. All of the talk about demanding too much in the first 2 years utterly misunderstands the Presidency - a President's power is at its height in the first 6 months of his Presidency. If Obama was impotent then, he is utterly powerless now. The chance of a great Presidency is dead. A Lost Decade seems a certainty.

Heckuva a job.

Speaking for me only

Full post as published by TalkLeft on October 28, 2010 (boomark / email).