6
FHA launches new refi program
Is your house underwater?
To view this content, Javascript must be enabled and Adobe Flash Player must be installed.
TEXT OF STORY
Kai Ryssdal: There's more than business and jobs that are wrong with the American economy right now. Today, the government rolled out the latest in a long string of programs to stop home foreclosures. It's aimed at houses that are underwater, where the mortgage is more than the house is worth. The Federal Housing Administration wants to encourage lenders to forgive some debt and in the process stop maybe a million and a half families from walking away from their homes. Nobody's had much success fixing the real estate market so far.
Marketplace's senior business correspondent Bob Moon reports that some are now saying it's time to stop propping up prices.
Bob Moon: The new program is narrowly focused at homeowners who have a stable income and remain current in their payments. The FHA will guarantee a modified mortgage if the lender voluntarily agrees to reduce the balance. Thus far, banks have been reluctant to do that -- even though more than one in five mortgages is estimated to be underwater nationwide.
The program is aimed at discouraging what's come to be known as "strategic default." But at George Mason University, real estate finance professor Anthony Sanders argues most underwater mortgage holders have kept on struggling to stay in their homes.
Anthony Sanders: If the strategic defaults aren't as bad as we feared, why do we have a strategic default program through the FHA?
Sanders predicts the program will help far fewer than the government estimates, and he contends it will disproportionately benefit those in the hardest-hit states -- Nevada and Arizona, for example, where more than half of all homes are estimated to be underwater.
Sanders: So in other words, we're just saying, "Well, if you happen to live in a state which had catastrophic housing failure, we're going to make people in Kansas pay for your writedown, 'cause someone has to pay for this."
Sanders is among a growing chorus of experts who say the government should let housing market find its own price level. But at the Harvard Business School, former FHA administrator Nicholas Retsinas says some government intervention is justified.
Nicholas Retsinas: The housing sector is too important, it's too important to our economy, it's too important to people's own balance sheet, their own sort of net worth, for government merely to be a spectator.
Retsinas says if anything, the government should have intervened more aggressively than it has.
Retsinas: I think they've tried to do the right thing. The problem is, it is no longer an issue of the housing market. It's really the broader economy and people losing their jobs.
For that reason, Retsinas fears the latest housing lifelines may be too little, too late.
I'm Bob Moon for Marketplace.
I loose my job in 2008 I work as a manchaine oprate. for 19years on my job.And now i cant find a job.I have been working for a temp sevice and only last for two months at a time then im back looking for another job or waiting for them to call me or try and find one on my own but i never here from the jobs that i put in for is that im to old for the jobs that im putting for.Me and my husband has just been gonig thou something he has retired in jan2010 and his check is the only income coming at this time.Oul morgage is like 10months behind and we cant get court up on any thing right now we need help with oul morgage payments because it is to high 1650. amouth along with oul other bills car payments car insure. bge bill it to much on us wear we are going without things we need.
It's interesting that this program is only for borrowers with non-FHA loans. It does not seems like borrowers in the exact same situation who have FHA loans already have any similar programs available, unless possibly they have a Freddie Mac or Fannie Mae loan.
Your "expert" says that the housing sector is too important for the government "to merely be a spectator." On the contrary. If the housing market is that important, it's too important for the government to intervene, because whenever the government gets involved in the economy it *hurts* the economy. The Left seems to think that the government can turn lead into gold. History shows that it does precisely the reverse.
I too have been a fantastic consumer, paying bills and my taxes to keep the economy humming along for many years. I tried to short sell my house througH Bank of America and they flat turned me down. I can's sell my home without their OK because I am underwater by 50%. I agree with N. Retsinas not Mr. Sanders. Now I am going to try to get something resolved through this new program. Finally, perhaps, they are going to assist those who are afraid to default because this state is a non-forgiveness state for deficiencies. It's not that we can't walk, we don't want to if the banks will just work with us. It all remains to be seen if this will help. I'm calling the bank now!
I listen to Marketplace every morning and every evening. This story caught my attention as there is another side to the foreclosure story that has not yet come into the lime light--and that is the great possibility that there are many pseudo foreclosures. Specifically, how many of these so-called foreclosures are actually bank errors + less savvy consumers = pseudo foreclosure? In our case, we are and have been stellar consumers. In fact, we have not only paid our mortgage on time, but have paid thousands in additional principal. Imagine our surprise when on the date that Obama chastises the banking industry for playing fast and loose with our economic future (Dec. 14, 2009), we received a “Notice to Accelerate†our home loan that included threats and a demand for payment of thousands of dollars! Imagine our further surprise when we demanded and received an “accounting†of our mortgage only to find that Bank of America records contain numbers that are inaccurate and false and have no basis in reality. We have been trying for months to get the situation straightened out with Sen. Sherrod Brown, Attorney General Richard Cordray and the Comptroller of the Currency all involved. To date, we have received what could only be described as “incredibly troubling†correspondence and phone calls from Bank of America—so troubling in fact that one of our friends commented: “BOA – the constrictor of the American dream.†Hence, not only does our government need to help those truly in need of refinancing, etc., they also need to help those of us that did pay our bills, did pay additional principal and are and have done what we needed to do to have our American dream. In addition, the government needs to do an audit of Bank of America’s mortgage practices (and possibly other banks’ mortgage practices) as doing so may evidence that some of these thought-to-be-foreclosures are really errors on the part of the bank, meaning that some Americans may be due back the keys to their homes.
I would be happy to share our evidence with your reporters as this is extremely disconcerting, especially when the US is attempting to get back to economic health. Nicholas Retsinas observes: “The housing sector is too important, it's too important to our economy….†Yep. “Too importantâ€, indeed to overlook that we stellar consumers are having to fight the big banks, too.
