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“Do Something Or Get Out Of The Way”

- October 12, 2011

Obama’s Failure On Housing Policy Has Democrats 
Fuming And Demanding Action

DEMOCRATS ARE DEMANDING OBAMA’S HOUSING DIRECTOR STEP DOWN AFTER LEARNING HE HAS NEVER MET SOMEONE WHO HAS BEEN FORECLOSED UPON

Rep. Elijah Cummings (D-MD) Was “Shocked” To Learn Edward DeMarco, Chief Regulator For Fannie Mae And Freddie Mac, Had Never Met Someone Who Was Foreclosed Upon. CUMMINGS: “When he told us that he had never talked to somebody who had been foreclosed upon — or was in danger of [being foreclosed upon] — to be honest with you, that shocked me.” (Mike Lillis, “Frustrated Democrats Suggest Top Obama Housing Official Resign,” The Hill, 10/6/11)

Rep. Dennis Cardoza (D-CA) Said That DeMarco’s Failure To Meet With A Single Foreclosed Homeowner Is “Unacceptable.” “The members of Congress are talking about 1 in 3 of their constituents who come to their office in tears telling us about their problems, and the person in charge of the program has never talked to a foreclosed Individual. That’s Unacceptable.” (Mike Lillis, “Frustrated Democrats Suggest Top Obama Housing Official Resign,” The Hill, 10/6/11)

  • Rep. Cardoza: “Either Do Something Or Get Out Of The Way.” “Rep. Dennis Cardoza (D-Calif.), who spearheaded the meeting along with Cummings, delivered a nearly identical message. ‘Either do something or get out of the way,’ Cardoza said. ‘And if you’re incapable of doing it, then find somebody who isn’t.’” (Mike Lillis, “Frustrated Democrats Suggest Top Obama Housing Official Resign,” The Hill, 10/6/11)

DeMarco’s Meeting With Democrats Was “Punctuated By Loud Voices And An Occasional Fist Pounding On The Table.” “In a meeting punctuated by loud voices and an occasional fist pounding on the table, according to participants, DeMarco absorbed the rhetorical punches and then promised to come back by the end of the month with a new plan. ‘He knows we're not satisfied,’ Costa said.” (Michael Doyle, “Valley Dems Blast Federal Housing Official,” The Fresno Bee, 10/6/11)

  • Rep. Jim Costa (D-CA): “He Knows We're Sick And Tired Of The Administration's Inability To Provide Meaningful Fixes For The Housing Crisis.” (Michael Doyle, “Valley Dems Blast Federal Housing Official,” The Fresno Bee, 10/6/11)

DeMarco Revealed To Lawmakers That The Agency Does Not Have A Plan To Help Homeowners In Danger Of Being Foreclosed Upon. “DeMarco, acting director of the Federal Housing Finance Agency (FHFA) — an agency independent of the White House — met Thursday with 17 House Democrats in the Capitol, ostensibly to brief them on FHFA’s enhanced efforts to help struggling homeowners. Instead, he revealed that the agency doesn’t yet have such a plan.” (Mike Lillis, “Frustrated Democrats Suggest Top Obama Housing Official Resign,” The Hill, 10/6/11)

  • DeMarco “Won’t Stand Up And Take Authority.” “‘[DeMarco] has the market power, with 30 million mortgages, to do much broader work than he’s doing, and he won’t stand up and step up and take authority,’ Cardoza said. ‘And he didn’t deny that he had that capability.’” (Mike Lillis, “Frustrated Democrats Suggest Top Obama Housing Official Resign,” The Hill, 10/6/11)

Rep. Anna Eshoo (D-CA): “There Has Been A Complete Failure On The Part Of The Obama Administration To Address The Catastrophic Wave Of Home Foreclosures Across The Country.” “There has been a complete failure on the part of the Obama administration to address the catastrophic wave of home foreclosures across the country, leaving families in despair and wreaking havoc in countless communities,’ Eshoo wrote in an email. ‘In order for our economy to expand, an effective policy must be put into place to turn this devastation of housing around. The administration’s weak responses have barely touched ‘the tip of the iceberg.’” (Mike Lillis, “Frustrated Democrats Suggest Top Obama Housing Official Resign,” The Hill, 10/6/11)

OBAMA’S POLICIES HAVE FAILED MISERABLY TO STEM THE WAVE OF FORECLOSURES TANKING HOMEOWNERS AND THE ECONOMY

“The Alphabet Soup Of Housing Assistance Programs To Date -- HAMP, HARP, EHLP, 2MP -- Have Been Too Poorly Administered And Too Limited In Scope And Eligibility To Slow Or Halt The Slide In The U.S. Housing Market.” “Only 2 percent of President Obama's speech to Congress on Sept. 8 dealt with the plight of underwater homeowners, but those 72 words could do as much or more for the flagging U.S. economy as the entire $447 billion jobs bill. Especially if the White House is willing to think big. That's a big if, given that the alphabet soup of housing assistance programs to date -- HAMP, HARP, EHLP, 2MP -- have been too poorly administered and too limited in scope and eligibility to slow or halt the slide in the U.S. housing market.” (Eric Wieffering, “Fixing Economy Requires More Work On Housing,” Star Tribune, 9/17/11)

President Obama Promised That His Housing Program – The Home Affordable Modification Program (HAMP) – Would Prevent 7 To 9 Million Families From Foreclosure. “And we will pursue the housing plan I'm outlining today. And through this plan, we will help between 7 and 9 million families restructure or refinance their mortgages so they can afford—avoid foreclosure.” (President Barack Obama, Remarks On The Home Mortgage Industry In Mesa, Arizona, 2/18/09)

  • But As Of August, Only 690,969 Homeowners Had Received Permanent Modification Through HAMP. The number of borrowers who received permanent aid through the Obama administration's signature foreclosure relief program ticked up slightly in August. A total of 690,969 borrowers had received active permanent modifications through the Home Affordable Modification Program by the end of August, up 2.3% from July, the Treasury Department said Wednesday.” (Alejandro Lazo, “More Borrowers Gain Permanent Mortgage Relief In August,” Los Angeles Times’ “Money & Company,” 10/5/11)
  • The Treasury Department Has Only Spent $1.85 Billion Of The $46 Billion It Was Given To Prevent Foreclosures. “As part of the bank bailout, the Treasury Department was given $46 billion to spend on keeping homeowners in their houses; to date, the agency has spent about $1.85 billion.” (Andrew Martin, “For Jobless, Little U.S. Help On Foreclosure,” The New York Times, 6/4/11)

Treasury Secretary Geithner Admitted That The Administration’s Housing Programs Have Not Lived Up To Expectations. “Mr. Geithner said that he agreed that the administration’s efforts had not met expectations, and he pointed to efforts by the Federal Housing Finance Agency to reduce barriers to refinancing, which he said could be introduced next week. ‘We are doing as much as we can with the authority we have to help people caught up in this crisis,’ Mr. Geithner said.” (Binyamin Appelbaum, “Treasury Secretary Urges Quick Action On Jobs Plan,” The New York Times, 10/6/11)

  • Geithner: “But Our Programs Have Dramatically Underperformed What We Thought. … We Are Very Disappointed And Frustrated By It And We Have A Lot Of Challenges Ahead.” (Treasury Secretary Timothy Geithner, Testimony Before The House Financial Services Committee, Washington, D.C., 10/6/11)

Edward DeMarco Admitted HARP Does Not Work And Needs “A Fix.” “‘He said that he recognizes that HARP doesn’t work,’ Cummings said. ‘He said it has been tweaked in the past, but he admitted that now it needs — and these are his words — ‘a fix.’’” (Mike Lillis, “Frustrated Democrats Suggest Top Obama Housing Official Resign,” The Hill, 10/6/11)

  • But Democrats Warn That The Administration’s Proposed Fix Will Be “Insufficient.” “But the Democrats are already warning that FHFA’s fix will be insufficient, estimating that it will help between 600,000 and 1 million homeowners refinance to take advantage of historically low interest rates — a fraction of the millions of consumers who are underwater on their mortgages.” (Mike Lillis, “Frustrated Democrats Suggest Top Obama Housing Official Resign,” The Hill, 10/6/11)

The Emergency Homeowners' Loan Program (EHLP) Is “The Most Recent Example Of Such An Effort Falling Short Of Goals.” “A federal initiative that gives bridge loans to homeowners struggling to make mortgage payments will likely pay out less than half the $1 billion that Congress allotted for the program, the most recent example of such an effort falling short of goals.” (Joseph De Avila, “Mortgage Aid Falls Short Of Its Goal,” The Wall Street Journal, 9/29/11)

  • Only 10,000 To 15,000 Homeowners Will Qualify For Aid Through EHLP. “Even after a Tuesday deadline for applicants to submit documentation was extended by two days, officials at the Department of Housing and Urban Development estimated that only about 10,000 to 15,000 homeowners will ultimately qualify. That would mean between $500 million and $670 million of the program's funds will be returned to the U.S. Treasury.” (Joseph De Avila, “Mortgage Aid Falls Short Of Its Goal,” The Wall Street Journal, 9/29/11)

AS THE OBAMA ADMINISTRATION DITHERS, THE WEAK HOUSING MARKET THREATENS TO DRAG THE ECONOMY BACK INTO RECESSION

“It Is Hard To See The Economy Returning To Health Until Housing Gets Better. And With A Glut Of Foreclosed And Distressed Homes Still On The Market, It Is Hard To See That Happening Anytime Soon.” (Justin Lahart, “Number Of The Week: The Economy’s Housing Albatross,” The Wall Street Journal’s“Real Time Economics,” 10/1/11)

 “Housing Remains The U.S. Economy’s Albatross.” (Justin Lahart, “Number Of The Week: The Economy’s Housing Albatross,” The Wall Street Journal’s “Real Time Economics,” 10/1/11)

  • Residential Investment Was Only 2.2 Percent Of GDP In Second Quarter. “In the second quarter, residential investment — money spent on building, adding to and maintaining homes — accounted for just 2.2% of GDP, according to the Commerce Department.” (Justin Lahart, “Number Of The Week: The Economy’s Housing Albatross,” The Wall Street Journal’s “Real Time Economics,” 10/1/11)
  • “That Was The Lowest Level Since 1945, When America Was On A War Footing.” (Justin Lahart, “Number Of The Week: The Economy’s Housing Albatross,” The Wall Street Journal’s “Real Time Economics,” 10/1/11)

Since President Obama Took Office, Over 7.3 Million Properties Have Received Foreclosure Filings. (RealtyTrac, Accessed 10/11/11)

  • In 2010, One In Every 45 Housing Units Received A Foreclosure Filing. (Press Release, “Record 2.9 Million U.S. Properties Receive Foreclosure Filings In 2010 Despite 30-Month Low In December,” RealtyTrac, 1/12/11)

In August, 31 Percent Of All Existing Home Sales Were For Distressed Properties Either In Foreclosure Or Sold In A Short Sale. “The national median existing-home price3 for all housing types was $168,300 in August, which is 5.1 percent below August 2010. Distressed homes – foreclosures and short sales typically sold at deep discounts – accounted for 31 percent of sales in August, compared with 29 percent in July and 34 percent in August 2010.” (Press Release, “August Existing-Home Sales Rise Despite Headwinds, Up Strongly From A Year Ago,” National Association Of Realtors, 9/21/11)

23 Percent Of Home Loans Are Underwater, “A Leading Indicator Of A Borrower’s Propensity To Default.” “However, of the nearly 46 million loans that were current as of the end of August, 23 percent were still at risk as a result of negative equity – a leading indicator of a borrower’s propensity to default.” (Press Release, “LPS August Mortgage Monitor Report,” Lender Processing Services, 10/3/11)

  • 4 Million Home Loans Are Currently In Foreclosure Or More Than 90 Days Delinquent. (Press Release, “LPS August Mortgage Monitor Report,” Lender Processing Services, 10/3/11)

“Nearly Half, 49 Percent Of Bank Risk Managers Said They Do Not Expect Housing Prices To Return To 2007 Levels Before 2020.” “Nearly half, 49 percent of bank risk managers said they do not expect housing prices to return to 2007 levels before 2020. Some 73 percent believe mortgage defaults will remain elevated for at least five more years. Furthermore, 46 percent expect mortgage delinquencies to increase over the next six months, and only 15 percent believe mortgage delinquencies will decline during that period.” (Steve Cook, “Bank Risk Managers Foresee Years Of High Foreclosures, Low Prices,” UPI, 10/3/11)


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