ForeclosureWe can now say with some degree of certainty that foreclosure mitigation plans, as conceived for the crisis years, didn’t work. All we have to do is look at the money allocated for the programs relative to the money paid out.

Three and a half years after the inauguration of HAMP, less than 10% of the money has been spent (really 4%, if you consider that the initial commitment was $75 billion, and just $3.4 billion has been spent on the initial purpose, incentive payments for servicers to modify loans). Other programs like Treasury’s Hardest Hit Fund have shown pathetic payout rates, and some of the stories boggle the mind. FHA’s Short Refi program helped all of 1,500 borrowers nationally in two years.

And this is as true at the state level as it is at the federal level. In fact, the two are often one and the same. We got another example of this from New Jersey. Keep in mind that the program in question here is paid for through a grant from Treasury’s Hardest Hit Fund.

In 2011, New Jersey accepted $300 million in federal money to start the Homekeeper Program, which would, as its website advertises, promote “neighborhood stability in New Jersey communities by providing financial assistance to eligible homeowners in danger of foreclosure.”

New Jersey currently suffers the second-highest foreclosure rate in the nation, according to the Mortgage Bankers Association. However, Hoffer reports that more than a year after the Homekeeper Program was launched, the state has doled out only $4 million, of $300 million available, to 498 families — while nearly 2,000 applicants have been denied.

There’s an amusing sidelight to this, with WABC reporter Jim Hoffer questioning Chris Christie about this at a press conference, and getting the usual bluster in return. But while it’s perfectly reasonable to attack Christie for failing to get the Homekeeper Program, it does exist as a state-federal partnership with Treasury’s Hardest Hit Fund. And the Treasury Department simply has not used its leverage to compel servicers to work with states on these measures.

Moreover, Christie is partially correct for the judicial-based reasons for the foreclosure backlog in New Jersey. The state’s highest court initially imposed a moratorium on foreclosure operations by the leading four servicers. However, they lifted that last August, so it doesn’t really work as an excuse now. What the courts have done is to ensure more verification of the foreclosure documents, which has slowed down the process. So much so, in fact, that they’re one of the states being bullied by the FHFA into relinquishing due process for their homeowners and allowing foreclosures to proceed faster.

So New Jersey has done a couple good things on foreclosures, though entirely at the judicial level. It’s completely valid to criticize Christie for the dysfunction in his foreclosure relief program. However, that’s a national condition as well.

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