We are told that this Administration “Cares”. If the latest housing wire report is correct, the Obama Administration has bailed out banks again---instead of directing that money to buy down the principal on distressed homes.
This came across today on Housingwire (2nd Article below bolded in brown). Apparently some 80% of the AG Bank Settlement proceeds are being used to cover the gap between the existing mortgage amount and actual short sale proceeds (lower than principal balance) of the residential homes in question. In other words, the proceeds are being used to cover the bank’s shortfall or loss position on the short sale rather than to keep struggling homeowners in their homes. Wasn’t the publicized purpose of the AG settlement reached in conjunction with the Administrations interjection to keep struggling borrowers in their homes?
Now let’s see; excerpt from the article on the Administration/State Attorneys General Settlement From Attorney General Holder and the Justice Department website entitled, “Federal Government and State Attorneys General Reach $25 Billion Agreement with Five Largest Mortgage Servicers to Address Mortgage Loan Servicing and Foreclosure Abuses $25 Billion Agreement Provides Homeowner Relief & New Protections, Stops Abuses “,
“It holds mortgage servicers accountable for abusive practices and requires them to commit more than $20 billion towards financial relief for consumers. As a result, struggling homeowners throughout the country will benefit from reduced principals and refinancing of their loans. The agreement also requires substantial changes in how servicers do business, which will help to ensure the abuses of the past are not repeated.”“This historic settlement will provide immediate relief to homeowners – forcing banks to reduce the principal balance on many loans, refinance loans for underwater borrowers, and pay billions of dollars to states and consumers,” said HUD Secretary Donovan.These new customer service standards are in keeping with the Homeowners Bill of Rights recently announced by President Obama – a single, straightforward set of commonsense rules that families can count on.”
So this article from Housingwire suggests the Administration is coming up a little short on immediate relief to homeowners including failure to implement reduction in principal balances on their loans, refinancing underwater borrowers, and paying billions of dollars to consumers, all of which was emphasized by HUD Secretary Donovan above (see my red bolding). Instead struggling homeowners are simply allowed to walk away, while the settlement proceeds which were initially coerced by government from the banks are simply reimbursed to the banks to cover the sale proceeds shortfall. It’s nice to know the Administration’s first priority is to “care enough” to send the banks the “very best”. Now what about all those existing/former distressed homeowners, not to mention struggling taxpayers who provided the funds in the first place??
So all of this is really becomes nothing more than political melodrama! Does anyone in this Administration ever speak the truth? Who is holding this Administration accountable?