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Just More Words: Obama Wants Nevada Homeowners To Drink The Sand

- January 26, 2012

For Nevadans Thirsty For Relief From The Housing Crisis, Obama Conjures A Mirage To Distract From Three Years Of Failures

OBAMA’S STATE OF THE UNION HOUSING PROGRAM IS THIN ON DETAILS AND DESIGNED TO HELP HIS CAMPAIGN MORE THAN THE HOUSING MARKET

The White House Declined To “Outline The Mechanics Or Costs” Of Obama’s New Mortgage Refinance Program.  “President Barack Obama called on Congress during Tuesday's State of the Union address to approve new legislation that would give all homeowners who are current on their mortgages the opportunity to refinance at record low mortgage rates. Administration officials declined on Tuesday to outline the mechanics or costs of the program, and they said those details would be spelled out in the legislation in the coming days.” (Nick Timiraos, “Obama Proposes Mortgage-Refinance Plan,” The Wall Street Journal, 1/24/12)

  • “Senior Administration Officials Wouldn't Elaborate On The Coming Legislation.” “Senior administration officials wouldn't elaborate on the coming legislation, but one vehicle for such refinancing would be the Federal Housing Administration, a government agency that doesn't make loans but instead insures lenders on losses for loans that meet certain standards.”  (Nick Timiraos, “Obama Proposes Mortgage-Refinance Plan,” The Wall Street Journal, 1/24/12)

Obama’s Proposal “Is The Latest Addition To A Mosaic Of Obama Administration Programs” That Have Failed To Boost The Housing Market. “The proposal, to be released in the coming weeks, is the latest addition to a mosaic of Obama administration programs aimed at boosting the housing market, which is entering its fourth year of weak sales and high foreclosures.” (Lorraine Woellert, “Obama Pushes Proposal To Streamline Refinancing For Homeowners,” Bloomberg, 1/25/12)

The Last Two Incarnations Of Obama’s Refinancing Program Only Helped About 1,000 Homeowners. “Haven’t similar programs been tried before? Yes. But those programs put in place a series of rules designed to ensure that government entities weren’t taking on more risk by allowing investors and banks to offload risky mortgages onto the government. In 2010, for example, the Obama administration rolled out a program to let underwater borrowers refinance through the FHA, but that program required banks to first write down loan balances so that borrowers could qualify under existing rules. Fewer than 1,000 loans have refinanced through the program. Congress approved a more complicated version of this idea in spring 2008 called Hope for Homeowners, but it also resulted in just a few hundred refinances.” (Nick Timiraos, “Six Questions On Obama’s Mortgage Refinance Proposal,” The Wall Street Journal, 1/25/12)

  • The White House Has Not Provided Details On Who Would Qualify For The Latest Attempt. “The latest initiative will not be limited to borrowers with Fannie and Freddie backed mortgages, though the full details of what loans will be eligible have yet to be released. It isn’t clear, for example, whether loans that don’t meet the criteria for the existing Home Affordable Refinance Program would be eligible for this new plan.” (Nick Timiraos, “Six Questions On Obama’s Mortgage Refinance Proposal,” The Wall Street Journal, 1/25/12)

The Brookings Institute: Obama’s Proposal Does Not Address The Main Reasons Borrowers Default And Would “Only Contribute Mildly To Foreclosure Prevention.” “It is important to note that reducing mortgage interest rates for underwater borrowers should only contribute mildly to foreclosure prevention. The key determinant of foreclosure is the cumulative loan-to-value ratio for the borrower, with a contributor factor being an inability to pay due to job loss. This program would not affect the loan-to-value ratio, as the amount of mortgage debt is unaffected by the refinancing. (This is why the administration’s previous plans to lower mortgage interest rates, through the Home Affordable Modification Program (HAMP), did not result in a substantial reduction in foreclosures.)” (Ted Gayer, “President Obama’s State Of The Union Housing Proposal,” The Brookings Institute, 1/25/12)

Chief Economist At Truila.com, Jed Kolko: “It Won’t Impact The Housing Market Much. Underwater Borrowers Will Remain Underwater, And You Need To Be Current On Your Payments To Refinance.” “Jed Kolko, chief economist and head of analytics at real estate website Trulia.com, said other potential government initiatives such as turning foreclosures into rentals or increasing loan modifications would ‘help the housing market more directly’ ‘This is primarily economic stimulus,’ Kolko said. ‘It puts money in the pockets of people with mortgages. It won’t impact the housing market much. Underwater borrowers will remain underwater, and you need to be current on your payments to refinance.’” (Alejandro Lazo, “Obama Takes Aim At Housing Bust In State Of The Union Speech,” Los Angeles Times, 1/24/12)

OBAMA’S “NEW” FINANCIAL CRIMES TASK FORCE WAS ALREADY ESTABLISHED BY THE PRESIDENT IN 2009

On Tuesday, Obama Established The Financial Crimes Unit “To Crack Down On Large-Scale Fraud And Protect People’s Investments.” OBAMA: “We’ll also establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud and protect people’s investments.  Some financial firms violate major anti-fraud laws because there’s no real penalty for being a repeat offender.  That’s bad for consumers, and it’s bad for the vast majority of bankers and financial service professionals who do the right thing.  So pass legislation that makes the penalties for fraud count.” (President Barack Obama, Remarks By The President In State Of The Union Address, Washington, D.C., 1/24/12)

  • “Obama Formed A Similar Task Force More Than Two Years Ago To Accomplish The Same Objective.” “The president also announced a new Financial Crimes Unit of federal prosecutors and state attorneys general to intensify investigations into improper lending practices that were at the heart of the financial crisis. Obama formed a similar task force more than two years ago to accomplish the same objective.” (Zachary A. Goldfarb, “2012 State Of The Union Analysis: Obama On Housing,” The Washington Post, 1/25/12)
  • In 2009, The Financial Fraud Enforcement Task Force Was Created To Investigate And Prosecute “Cases Of Bank, Mortgage, Loan, And Lending Fraud.” “(a) provide advice to the Attorney General for the investigation and prosecution of cases of bank, mortgage, loan, and lending fraud; securities and commodities fraud; retirement plan fraud; mail and wire fraud; tax crimes; money laundering; False Claims Act violations; unfair competition; discrimination; and other financial crimes and violations (hereinafter financial crimes and violations), when such cases are determined by the Attorney General, for purposes of this order, to be significant;” (Office Of The Press Secretary, Executive Order 13519 – Establishment Of The Financial Fraud Task Force, The White House, 11/17/09)

And The Task Force Has Been Co-Chaired By Lanny Breuer, A Justice Department Attorney With Deep Ties To Big Banks And Foreclosure Fraud

“In Addition To Schneiderman, The Unit Will Be Co-Chaired By Lanny Breuer, Assistant Attorney General At The Criminal Division Of The Department Of Justice …” (Sam Stein, “Exclusive: Obama To Announce Mortgage Crisis Unit Chaired By New York Attorney General Schneiderman,” The Huffington Post, 1/24/12)

Breuer And Attorney General Eric Holder Were Partners At A Law Firm “That Represented A Who's Who Of Big Banks And Other Companies At The Center Of Alleged Foreclosure Fraud.” “U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department's criminal division, were partners for years at a Washington law firm that represented a Who's Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows.” (Scott J. Paltrow, “Insight: Top Justice Officials Connected To Mortgage Banks,” Reuters, 1/20/12)

  • Despite “Copious” Evidence Of Wrongdoing, “Under Holder And Breuer, The Justice Department Hasn't Brought Any Criminal Cases Against Big Banks Or Other Companies Involved In Mortgage Servicing.” “Reuters reported in December that under Holder and Breuer, the Justice Department hasn't brought any criminal cases against big banks or other companies involved in mortgage servicing, even though copious evidence has surfaced of apparent criminal violations in foreclosure cases.” (Scott J. Paltrow, “Insight: Top Justice Officials Connected To Mortgage Banks,” Reuters, 1/20/12)

OBAMA’S FAILED HOUSING PROGRAMS HAVE LEFT NEVADA WITH THE WORST HOUSING MARKET IN THE NATION

SHOCK: The Las Vegas Constable’s Office Performs Nearly 300 Evictions A Day. “Foreclosures are forcing people out of their homes and onto the streets. The Las Vegas Constable's Office has the dirty job of kicking people out. They do nearly 300 evictions a day -- the most in the city's history. This is the human side of the foreclosure crisis. What the deputy constables see everyday is not a financial statement but a family's life packed up in boxes and trash bags being forced out.” (Calvert Collins, “Nearly 300 Evictions Take Place Daily In Las Vegas Valley,” KLAS [Las Vegas, NV],  11/16/11)

  • FORECLOSURE MAP: Las Vegas’ Hardest Hit Zip Codes
  •  “More Than 6 Percent Of Nevada Housing Units (One In 16) Had At Least One Foreclosure Filing In 2011, Giving It The Nation’s Highest State Foreclosure Rate For The Fifth Consecutive Year.” (RealtyTrac, “2011 Year-End Foreclosure Market Report: Foreclosures On The Retreat,” Press Release, 1/12/12)
  • “[L]as Vegas Posted The Nation’s Top Foreclosure Rate For The Year Among Metropolitan Statistical Areas…” “With 7.38 percent of its housing units (one in 14) with at least one foreclosure filing in 2011, Las Vegas posted the nation’s top foreclosure rate for the year among metropolitan statistical areas with a population of 200,000 or more.” (RealtyTrac, “2011 Year-End Foreclosure Market Report: Foreclosures On The Retreat,” Press Release, 1/12/12)

In Nevada, Nearly Two-Thirds Of Homeowners Are Underwater On Their Mortgages. “Data earlier this year from CoreLogic.com showed that nearly two-in-three Nevada homeowners owed more on their property than their homes were worth — a situation also known as being ‘underwater.’ Nevada was followed by Arizona (51 percent), Florida (47 percent) and Michigan (36 percent) in terms of underwater loans.” (Aaron Blake, “Obama And The Politics Of The Housing Foreclosure Crisis,” The Washington Post’s The Fix, 10/24/11)

  • Nearly 270,000 Residences Are Underwater In The Las Vegas Metro Area And “The Number Of Southern Nevadans Helped By Federal Mortgage Relief Programs Has Been Minimal.” “Considering the 269,560 mortgaged residences in the Las Vegas metro area that were underwater as of June, according to real estate analytics firm CoreLogic of Santa Ana, Calif., the number of Southern Nevadans helped by federal mortgage relief programs has been minimal.” (Steve Kanhigher, “Federal Housing Program Fails To Help Most Underwater Homeowners,” KLAS [Las Vegas, NV], 11/16/11)
  • Nevada’s Home Values Have Fallen So Much That Many Homeowners Don’t Qualify For Obama’s Housing Programs. “One reason too few homeowners have received federal help to make their mortgages more affordable has been program qualifications that are too strict for most of them to meet. Obama conceded as much in Las Vegas outside the home of Jose and Lissette Bonilla when he said that under the HARP guidelines homeowners couldn't qualify if what they owe on their mortgage exceeds the value of their home by at least 25 percent.” (Steve Kanhigher, “Federal Housing Program Fails To Help Most Underwater Homeowners,”KLAS [Las Vegas, NV], 11/16/11)

Nevada Has The Two Metropolitan Areas Hit Hardest By The Recession

Carson City Is The Single Hardest Hit Metropolitan Area During The Recession, Losing 4,800 Jobs, Or 15.1% Of Its Workforce. “Carson City, Nevada has the dubious honor to be the only metropolitan area that is not projected to recover any jobs at all this year. The region has lost thousands of jobs during the recession, and will continue to lose them through the end of 2012. By the end of this year, the region is projected to lose 4,800 jobs from the beginning of 2007, according to the report. It is the only area not to reach a bottom this year so that it could start recovering. Between June and November of last year, the region lost roughly 600 government jobs. Between 2005 and 2009, the metro region’s exports dropped $94 million, or nearly 40%.” (“The Nine American Cities Nearly Destroyed by the Recession,” AOL Money & Finance's 24/7 Wall Street, 1/23/12)

Reno-Sparks Is The Second Hardest Hit Metropolitan Area During The Recession, Losing 38,200 Jobs, Or 16.9% Of The Workforce. “Carson City, Nevada has the dubious honor to be the only metropolitan area that is not projected to recover any jobs at all this year. The region has lost thousands of jobs during the recession, and will continue to lose them through the end of 2012. By the end of this year, the region is projected to lose 4,800 jobs from the beginning of 2007, according to the report. It is the only area not to reach a bottom this year so that it could start recovering. Between June and November of last year, the region lost roughly 600 government jobs. Between 2005 and 2009, the metro region’s exports dropped $94 million, or nearly 40%.”  (“The Nine American Cities Nearly Destroyed by the Recession,” AOL Money & Finance's 24/7 Wall Street, 1/23/12)


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