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Report: More foreclosure help needed

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Steve Chiotakis: A Congressional Oversight Panel is out with a warning today: The government program to help homeowners avoid foreclosures — known as the Home Affordable Modification Program, HAMP — is falling short. The panel is chaired by Harvard law professor Elizabeth Warren. And Professor Warren is with us now. Good morning.

Elizabeth Warren: Good morning.

Chiotakis: So why isn’t this plan working very well?

Warren: Well, we think it has three basic problems. 1) Scope — It’s targeted at a housing crisis as it existed six months ago. 2) Scale — It’s not moving into big-enough numbers fast enough. And 3) Permanents — We’re concerned that people may go through the program, but actually be re-defaulting in big numbers down the line.

Chiotakis: Why wasn’t the government more aggressive about tackling the foreclosure problem? I mean we knew that the recession was setting in and unemployment would rise when the financial crisis hit. It seems like rising foreclosures were being predicted even back then.

Warren: You know, it’s true. We did our first report six months ago and came to the conclusion that there was a crisis then, and quite frankly, it’s only gotten worse. I think part of the problem is that there’s been kind of a let’s put a lot of energy into who’s a deserving homeowner and who’s not, and I understand that impulse. But in the meantime the fire is spreading and costing everybody in America a lot of money.

Chiotakis: And what’s your recommendation for improvements to this program? What do you say to Republicans who say no good money after bad money?

Warren: Well I wish it were good money after bad money that we were talking about here. I see the appropriate way to understand this really is the fire metaphor. Our neighbors’ homes are on fire, and we can sit around and talk about how the fire got started and we can talk about which ones we think we ought to save. But the truth is, if we don’t do something, it’s going to burn down the rest of us. So this is really about trying to find the most cost-effective way to save the economy, and if that means trying to save some of these homeowners and keep good people in their homes, and keep communities in tact, then that’s what we ought to be doing.

Chiotakis: Professor Elizabeth Warren, chair of the oversight panel. Thanks for being with us this morning.

Warren: Thank you.

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