Exchequer

18 Democrats Get Religion on HAMP

The House has voted to kill HAMP, a con game being run by mortgage-servicers on American mortgage borrowers with the blessings of the Obama administration. HAMP, as I have argued, isn’t a defective program: It is a scam, a rip-off designed to be a rip-off.

Among those voting to end this fraud were 18 House Democrats including George Miller, a Nancy Pelosi protégé who told the Huffington Post:

What we saw was just a commonality of abuse by servicers, the banks, of our constituents. They were being lied to. Their documents were being lost on a regular basis. Their phone calls were not returned. They were told they’d be handed off to another person, that never took place. They were told they would be eligible in a couple months, that never took place.

This is consistent with the experience of many (too many) HAMP borrowers.

The question is: Why do most Democrats support this rip-off?

The answer is: Because it is backed by one very important Democrat: Barack Obama.

And why does Obama support it?

HAMP doesn’t really stop a lot of foreclosures, but it does slow the process down, and the Obama administration (along with the Committee to Reinflate the Bubble) is desperate to prop up the housing market by any available means, even, apparently, if that means giving an excruciatingly raw deal to a lot of vulnerable homeowners, some of whom were duped into intentionally falling behind on their mortgages in order to qualify for HAMP modifications that never came. Obama’s Treasury Department has said that it cannot even do anything to punish banks that violate HAMP’s rules.

The Obama administration knows that the housing crash isn’t over: Wall Street Journal, 21 March:

Sales of previously occupied homes in the U.S. sank by 9.6% in February and prices fell to the lowest level in nearly nine years, indications that the market remains depressed.

Existing-home sales decreased from a month earlier to a seasonally adjusted annual rate of 4.88 million, the lowest level since November, the National Association of Realtors said Monday.

The results were worse than forecast. Economists surveyed by Dow Jones Newswires had expected home sales to decline by 3.9% to an annual rate of 5.15 million.

The results called into question whether the U.S. housing market is recovering or falling further.

Housing prices ultimately are going to find their bottom. The Obama administration does not wish for that to happen at a politically inconvenient time — not with unemployment still high, gasoline prices headed up, and significant inflation in food and energy prices hovering over the economy. But HAMP is an embarrassment: Basically, the banks pretend to put borrowers on the road to a permanent loan modification and then begin conveniently losing paperwork, neglecting to process it in a timely fashion, suddenly discover documentation problems, etc., with the end result that many borrowers end up far worse off than they were before. Many who might have been able to avoid losing their homes will lose them because of the corrupt way in which HAMP has been implemented.

Congress should not only end this program, it should open an investigation into the fraud connected with it. If there is any truth at all to the stories being relayed by HAMP victims, some bankers should go to jail over this.

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