Tweet
I gave a qualified decent review to the Democratic Party platform on the deficit and social insurance programs. I cannot come close to doing the same on housing. In fact, the platform plank on this issue is so disingenuous, it makes Paul Ryan’s convention speech look scrupulously honest. I have to go through this 285-word section line by line.
The housing plank starts off promising and then immediately undermines itself:
For more than a decade, irresponsible lenders tricked buyers into signing subprime loans while too many homeowners got in over their heads by buying homes they couldn’t afford.
Remember, you can’t talk about the largest consumer fraud in history without also blaming homeowners for buying “too much home.” When you’re talking about a systemic fraud perpetrated by lenders, trustees, financiers, appraisers, brokers, middlemen, lawyers, robo-signers and all the way up to executives at the highest levels, “irresponsible” homeowners slot in very low on my list. As I understand it, you need two sides to make a loan deal. Under normal underwriting conditions, it should be impossible for anyone “irresponsible” to try to buy a home they couldn’t afford.
Moving on, there’s a pro forma section about how everyone was hurt by the housing bubble’s collapse, even “responsible homeowners who played by the rules, but saw their home values decline and their neighbors’ houses sit vacant.” And then we hear about all the great things that the President has done to save the housing market:
President Obama took swift action to stabilize a housing market in crisis, helping five million families restructure their loans to help them stay in their homes, making it easier for families to refinance their mortgage and save hundreds of dollars a month, and giving tax credits to first-time home buyers.
Are they kidding with this? Here’s the most recent housing scorecard from HUD, from July of this year. You get to this 5 million number by counting “homeowner assistance actions,” through HAMP, and that would include trial modifications that have not been made permanent, and which could be cancelled at any time. And then you have to add loss mitigation programs at FHA and HOPE Now. The latter isn’t even the Obama Administration’s program. None of this includes the modifications that went into redefault or the trial modifications that were cancelled and squeezed the borrower by demanding the difference between the original payment and the trial modification immediately.
Remember that HAMP alone was supposed to save 4 million homes, a recognition that the other programs counted here were completely insufficient. HAMP currently has administered about 1 million permanent modifications, and about one-quarter of those have redefaulted. And they overlook the fact that less than 10% of the money appropriated to HAMP for housing relief has been spent. This section is finely crafted bullshit.
In addition, what has made it easier for families to refinance, what has driven refinance numbers, clearly has been low interest rates. Even small changes up or down in interest rates impact the frequency of refis tremendously. As for “giving tax credits to first-time home buyers,” most economists agree that was a bad thing. It was a giveaway to upper-middle class individuals who bought homes, and it just brought sales forward rather than increase the pie of sales overall.
But all of that pales in comparison to this next passage:
He also cracked down on fraudulent mortgage lenders and other abuses that contributed to the housing crisis. Democrats have held the largest financial institutions accountable by requiring them to provide relief for homeowners still struggling to pay their mortgages and to change practices that took advantage of homeowners.
The only thing that they could possibly be referring to here is the foreclosure fraud settlement. I think I’ve described this enough, including the revelation in the last week that almost all of the “consumer relief” to date has come from short sales that the industry was pursuing already, not to have to repeat myself. There was absolutely no accountability in the settlement. Period. End of sentence. There has been no “cracking down” on abuses in the housing market. Robo-signing still happens. MERS is still an operational entity. Servicing abuses still persist. Homeowners are still being taken advantage of, every single day.
Then there’s a pro forma reference to the Neighborhood Stabilization Program, which the President tries to expand in the American Jobs Act, to no avail. The NSP is such a small and insignificant program, I’m surprised they had to reach that low to find something to tout.
Then there’s the going-forward solutions section. Notice the lack of the words “principal reduction.”
Too many people still owe more on their homes than they are worth. That is why Democrats are fighting to give every responsible homeowner the chance to refinance their home, spurring investment in communities that have been hit hardest by foreclosure, and taking whatever steps we can to avoid more foreclosures. The President remains committed to creating an economy that’s built to last, where home ownership is an achievable dream for all Americans.
The Republican platform on housing at least had the honesty to reject principal reduction. The Democrats pretend it doesn’t exist. And they certainly don’t appear to show any awareness of the continuing damage caused by the mortgage industry. Republicans mentioned that they don’t want to unfairly advantage homeowners vis-a-vis renters, and they re-upped a commitment to low-income housing. There’s absolutely nothing of that here.
This platform plank borders on the offensive.
17 Comments
Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
What do you expect from a party whose establishment has sold out the values which made people want to vote for it for almost 50 years straight? Who made up the committee that approved this nonsense? Lastly, who even reads these things any more?
At least they had the good sense to leave out Tom Miller’s immortal “People will go to jail.”
“…borders”?? Obama’s housing policy is not a bug. It is a feature.
“10) Austerity is a means by which the rich can buy up assets which are not normally on the market for cheap.”
Read all 21 points by Ian Welsh for a succinct appraisal of how f*cked we are. ianwelsh.net
Somebody has to pay for principle reduction – either the banks or the taxpayers. No wonder the Democrats don’t say anything about it. They’d have to either piss off their Wall Street bankster friends, or the taxpayers (voters).
David, this is part of the bullshit Obama believes he needs to do. Remember, team obama believes what is really failing is they haven’t gotten the good word out.
I’m starting to read and hear a lot of obamabots say nonsenses and lies about bo policies and performance. They believe they can make the weak minded experience a Groundhog Day scenario. Each day starts anew with no hint of the prior days.
Someone has to pay for the losses in a foreclosure
Someone has to pay for the losses on short sales.
Both foreclosures & short sales exist when the family in the home has financial hardship.
Why there is no program to provide these families principal relief, help their neighbors and be a more humane public policy is a question not addressed.
Unless:
The whole process is used as Control through punishing the public and exert the control through more and more fear.
Realtors also have to take blame as well. No one ever talks about how realtors helped the scam. Some where even involved in titles and lending and were making money on all ends. I you could afford say a $100K house, Realtors would play up all the ways you could get a $300K house. Many buyers just look at things from the perspective of we can afford say $1500 a month not we really want a 1/2 million dollar house. When people tell you they can make a deal work for your budget it does seem too good to pass up.
A coworker told me the other day that he had approached his bank, the holder of his second mortgage (He’s underwater) with this proposition;
“How about I quit paying you?”
“Then we will foreclose.”
“In a foreclosure you’d get nothing because you’re a second mortgage.”
A couple of weeks later he got a letter in the mail offering to settle his approx. $50K second mortgage for $5K.
Done deal.
I’d like to hear if anyone else has heard of this sort of settlement working?
Reading David’s analyses of the planks if quite painful, but not nearly as painful as Obama’s lack of doing anything for the four lower economic quintiles during his administration.
Worse and worser, that’s our choice this year. Oh, and Obama can become worser given four more years.
We are so screwed.
Dagnabitall, makes me wish I had a second mortgage — instead of needing to take one out for needed repairs. I wonder if this kind of situation is affecting the secondary mortgage market’s practices….
http://twitter.com/theharryshearer/status/243004376392822789
Terrible! What more can you say?
I will say I am personally very angry that MERS still exists. That ” system” by it’s very existence is a fraud. A pox on the fuckers!
What part of this do you not understand?
It was underwriting fraud.
Thanks for the link to Welsh. That list should be required reading.
Number 21 is especially interesting: “The money the Fed floods into the financial markets (quantitative easing, among others) is mostly NOT getting to ordinary people, and whatever Bernanke and his apologists say, it was never intended to. It is intended to prop up financial actors, and keep the rich richer. It has done what it is supposed to do.”
I’ve come to regard QE as federally-sanctioned cooking the books. It is made-up money that can be thrown into various investments to make the bank look healthy.
It’s ridiculous to blame the realtors unless they were the Banksters making the loans.
There’s a good article today at counterpunch.org that references a piece at nakedcapitalism on this subject. Seems that there’s a program designed to facilitate bulk sales of single family homes to private equity firms at discounted prices with favorable financing by Fannie Mae, with administration approval.
Gotta love that stealth corporatism of the Obama administration./s
Even if someone was not a victim of a predatory lender, it’s likely that their house might be under water just because they bought while the market was wildly inflated due to all of the fraudulent activity surrounding them.
I fail to understand why we need a documented smoking gun (rapacious lying servicer, corrupt appraiser, duplicitous real estate agent) to establish that a corrupt system had stolen from home owners. The bubble itself was a result of fraud, so why can’t we acknowledge this and allow write-downs to fair market value, (mark-to-market style) and move on.