Obama Housing Rescue Slowly Dying?

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.

The Treasury Department released yesterday the latest monthly data for its flagship homeowner relief program—and it’s not pretty. So far, in the 14-month-old Home Affordable Modification Program, just under 300,000 homeowners have received permanent modifications to their mortgages—that means lower payments for a three- to five-year period for the homeowner to try to keep them in their home. Those modifications, however, are dwarfed by the pool of delinquent borrowers deemed by Treasury as eligible for HAMP, numbering 1,702,134. (For a bit of context, there were 2.8 million foreclosures in 2009.)

What’s more telling is this graph, via Calculated Risk, that shows the pace of new trial modifications—the testing period for homeowners to prove they can stay current on their theoretically lowered payments—is noticeably slowing down. In September 2009, HAMP recorded nearly 135,000 new trial modifications; in April 2010, there were 37,021 modifications. The graph below shows that this decline has been underway since the beginning of 2010.

Bill over at Calculated Risk draws this conclusion about HAMP, a much maligned program whose problems I’ve been writing about for nearly a year:

If we look at the HAMP program stats (see page 5), the median front end DTI (debt to income) before modification was 44.9% – up slightly from 44.8% last month. And the back end DTI was an astounding 80.2% (up from 77.5% last month).

Think about that for a second: over 80% of the borrowers income went to servicing debt. And it is over 64% after the modification. Do they have a life?

Just imagine the characteristics of the borrowers who can’t be converted!

In summary: 1) the program is dying, 2) the borrowers DTI characteristics are poor – and getting worse, and 3) there are a large number of borrowers in modification limbo.

FOLLOW THE MONEY

Corporations and billionaires don’t fund journalism like ours that exists to shake things up. Instead, support from readers allows Mother Jones to call it like it is without fear, favor, or false equivalence.

And right now, a longtime friend of Mother Jones has pledged an incredibly generous gift to inspire—and double—giving from online readers. That's huge! Because you can see that our fall fundraising drive is well behind the $325,000 we need to raise. So if you agree that in-depth, fiercely independent journalism matters right now, please support our work and help us raise the money it takes to keep Mother Jones charging hard. Your gift, and all online donations up to $94,000 total, will be matched and go twice as far—but only until the November 9 deadline.

$400,000 to go: Please help us pick up the pace!

payment methods

FOLLOW THE MONEY

Corporations and billionaires don’t fund journalism like ours that exists to shake things up. Instead, support from readers allows Mother Jones to call it like it is without fear, favor, or false equivalence.

And right now, a longtime friend of Mother Jones has pledged an incredibly generous gift to inspire—and double—giving from online readers. That's huge! Because you can see that our fall fundraising drive is well behind the $325,000 we need to raise. So if you agree that in-depth, fiercely independent journalism matters right now, please support our work and help us raise the money it takes to keep Mother Jones charging hard. Your gift, and all online donations up $94,000 total, will be matched and go twice as far—but only until the November 9 deadline.

$400,000 to go: Please help us pick up the pace!

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate