Home > Finance and Economics > Obama’s foreclosure prevention program a bust

Obama’s foreclosure prevention program a bust

Andy Kroll digs into the CBO’s assessment of the Home Affordable Modification Program:

The core of that program is the Home Affordable Modification Program (HAMP), a multibillion-dollar effort that’s done next to nothing to alleviate the ongoing foreclosure crisis. (Read this and this for more.) A year into HAMP, only 170,000 people have received permanent reductions in their monthly mortgage payments. (By contrast, foreclosures last year set a new record, with 2.8 million.)

Now comes the news, via the nonpartisan Congressional Budget Office, that HAMP, which was initially projected to spend $50 billion helping homeowners, will only spend 40 percent of that, or $20 billion.

What that means for beleaguered homeowners is that far less help is on the way from an already wounded program. Which shouldn’t come as a surprise. Whereas Obama himself said in February 2009 that the Making Home Affordable program “will help between 7 and 9 million families restructure or refinance their mortgages,” the Treasury Department’s goal, in the case of HAMP, has always been to “offer” 3 to 4 million modifications to homeowners—with no guarantee for help.

Forget for a minute, the already flawed idea that subsidizing the losses that homeowners are taking on their homes (most of which are unrealized), given that homeowners who are late paying their mortgages after having overextended themselves, knowing full well that they would not have the capacity to carry the debt.  Subsidizing them to forestall the inevitable has always been a loser’s game, a game that unfortunately, the Federal government loves to play.

Forget all of that.

Either Barack Obama really has no concept of how markets work, or of how the private sector operates, because his statements as to the alleged benefits of the program are so off the mark, so out of touch with reality.

Does anyone really still believes a word he says about say, healthcare reform?

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