The housing industry is certainly getting stirred up as we close in on the Midterm elections. It’s as though someone took the most polarizing aspects of the housing crisis, plopped them into a blender and hit the “on” switch.
Here’s what’s been happening in the past week:
The Federal government started things off at the end of last week by announcing that it felt the mortgage lenders didn’t need to freeze foreclosures because they had been following procedure and that no one was finding much wrong with the affidavits – except, of course, that they were filed by people who lied on them.
That small point aside, we heard from Department of Housing and Urban Development (HUD) Secretary Shaun Donovan that foreclosures should proceed as planned so that the housing industry could process them and continue its recovery.
But on Monday, Donovan blogged on the HUD Blog (and cross-posted on the Huffington Post) that no one should lose their home because of a bank error.
“The recent revelations about foreclosure processing — that some banks may be repossessing the homes of families improperly — has rightly outraged the American people. The notion that many of the very same institutions that helped cause this housing crisis may well be making it worse is not only frustrating — it’s shameful.
“No one should lose their home as a result of a bank mistake. No one. That is why the Obama Administration has a comprehensive review of the situation underway and will respond with the full force of the law where problems are found. The Financial Fraud Enforcement Task Force that President Obama established last November has made this issue priority number one. Bringing together more than 20 federal agencies, 94 US Attorney’s Offices and dozens of state and local partners to form the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud, the Task Force is examining this issue and the Attorney General has said publicly that if it finds any wrongdoing the members of the task force will take the appropriate action. The Federal Housing Administration and Federal Housing Finance Agency have launched reviews to make sure servicers are in full compliance with the law. The Office of the Comptroller of the Currency has directed seven of the nation’s largest servicers to review their foreclosure processes, fix the processing problems and determine whether there is specific harm that has been caused in individual cases.”
This morning, Donovan went on CNBC to say that some banks weren’t actually doing what they were supposed to do to keep Americans in their homes, what they were contractually obligated to do. No, really?
In a news conference at the White House, Donovan said “We will follow up vigilantly on the noncompliance, the potential noncompliance, that we have found and I want to be clear that we will demand that servicers take actions as required by FHA to do everything they can to keep borrowers in their homes.”
That’s a flash of insight. All you have to do is take a look at the 800+ people who have left comments on my MoneyWatch.com post, Loan Modification Hell: Join The Club to know that there are plenty of things that servicers haven’t been doing their jobs well.
In fact, every morning I wake up to a handful of new emails from homeowners who are on the verge of losing their home due to bad information provided by their servicers. Even if you assume that not everyone understood what temporary loan modifications would do to one’s credit or how much you might owe the lender if your modification was not approved, it’s clear that not all servicers have played by the rules, a fact Donovan acknowledged in Wednesday’s press conference.
“The performance across servicers is very different and so we are finding compliance, significant compliance, with a number of servicers while others appear not to have met their obligations to borrowers or to the FHA,” Donavan said.
Apparently, the Federal government is going to take on the servicers who haven’t been doing enough to keep people in their homes. But what does that really mean? After all, the loan modification programs are entirely voluntary. Lenders don’t have to participate – even those that say they’re going to sign up. The paperwork is replete with errors and it’s clear to me that what President Obama is trying to do now is send out his team to score points in the last two weeks before the elections.
Is it really only all about politics? We know it’s always about the banks, but when does it get to be about Americans who live on Main Street?
All I know is that I’m profoundly disappointed to see so many people still in trouble after three long years.