Housing downturn worsens?

[Cats Cats Cats]

http://www.msnbc.msn.com/id/42881365/ns/business-personal_finance/

I posted this for this little gem..

"There were many causes of the foreclosure crisis — and plenty of blame to go around among mortgage lenders, regulators and, in some cases, the borrowers themselves." 

*GASP* you mean the borrowers have something to do with not being able to pay their mortgage?

[nathanm]

http://www.msnbc.msn.com/id/42881365/ns/business-personal_finance/

I posted this for this little gem..

"There were many causes of the foreclosure crisis — and plenty of blame to go around among mortgage lenders, regulators and, in some cases, the borrowers themselves." 

*GASP* you mean the borrowers have something to do with not being able to pay their mortgage?

Shocking, given that we're around 10% unemployment and another 10% forced to take part time work in many states. (not Oklahoma)

[Conan71]

Yeah, the idea of personal borrower responsibility being trotted out there is somewhat of a shocker.

The attempt to deal with it is nothing short of a colossal government clusterf*ck.  There are simply some areas government has gotten too big and to inefficient to serve in a meaningful fashion and/or employing people who really don't care about the job they are doing. They are simply filling a position and punching a clock, not really motivated to get distressed borrowers real help. 

"The government's efforts to stem the crisis are widely viewed as a failure. Its flagship foreclosure relief program, the Home Affordable Modification Program, has been hampered by  confusion over its terms, lenders' widespread refusal to forgive loan principal and a "trial modification" process that, in some cases, leaves homeowners worse off than when they entered the program.

"The biggest problem with the program is that noncompliance is still rampant, and it's not improving," said Alys Cohen, an attorney with the National Consumer Law Center, which is lobbying for more effective foreclosure prevention programs.

Despite the heavy toll on families, communities and the economy, the response from Congress, the White House and an alphabet soup of federal and state agencies has been a piecemeal approach that hasn't fixed the problem."

[nathanm]

"The government's efforts to stem the crisis are widely viewed as a failure. Its flagship foreclosure relief program, the Home Affordable Modification Program, has been hampered by  confusion over its terms, lenders' widespread refusal to forgive loan principal and a "trial modification" process that, in some cases, leaves homeowners worse off than when they entered the program.

"The biggest problem with the program is that noncompliance is still rampant, and it's not improving," said Alys Cohen, an attorney with the National Consumer Law Center, which is lobbying for more effective foreclosure prevention programs.

Yes, it's quite unfortunate that while Obama is apparently perfectly willing to tell Pakistan where to go shove it, he can't seem to get Holder to sue the effing banks for ignoring the law. As always, however, things are going the way they are with the program because the incentives are terribly misaligned. The banks are just servicing the loans, and the servicers get more money if they don't modify. Even if the loan goes into foreclosure, it's not their problem. They get to collect fees from the CDO vehicle anyway. File foreclosure papers? Fee. Hire someone to secure the house? Fee. Mow the lawn? Fee. Sell the house at auction? Fee.

Once again, the banks are screwing the investors, and why shouldn't they? Doing loan mods gets them one fee and then a borrower that pays on time. Not doing loan mods gets lots of fees.

Not that it would matter if the unemployment nut could be cracked. Sadly, companies that have job vacancies are still refusing to hire those who have been unemployed, and there's a lot of long-term unemployed out there. I'm not quite sure what the government can do in that regard short of giving the long-term unemployed people jobs in the hopes that the private sector will hire them after they've been working again for a while.

[Conan71]

The reason Holder won't sue them is because banking is pretty much a self-regulated industry.  They don't spend billions each year on political campaigns at all levels and lobbying to make it harder on them.  It's like pharma and so many other industries, they aren't regulated, they've bought the rights to their own regulation standards.

[Cats Cats Cats]

Is it a law or a voluntary program the banks can get in on?

[nathanm]

Is it a law or a voluntary program the banks can get in on?

AIUI, they were required to do these modifications in one of the bailout bills.

Conan, the irony is that while Obama has been terribly soft on the banks to the detriment of the public, the bankers have all thrown their hands up and claim that he's being too hard on them and moved most of their donations to Republicans. They're really pissed about the financial regulation bill.