According to the latest data from RealtyTrac, “foreclosures rose in three of every four large U.S. metro areas in this year’s first half,” providing yet another piece of proof that the foreclosure crisis is far from over. “More than 3 million households are seen getting at least one foreclosure notice this year, and this record will be surpassed slightly at the peak of next year,” RealtryTrac estimated.
The slow but consistently mounting number of foreclosures is, sadly, warranting little attention from lawmakers. And the Obama administration’s signature foreclosure prevention program, the Home Affordable Modification Program (HAMP), has fallen flat on its face. The latest report shows that fewer than 400,000 homeowners have received permanent modifications. In fact, more homeowners (520,814) have fallen out of the program than have had their mortgage modified.
HAMP has suffered from a series of design flaws, but one of the biggest is that there’s simply no incentive for banks to make a wide effort at implementing modifications, as the program contains no stick to force a bank’s hand. In fact, at this point, Democratic lawmakers have been reduced to asking banks if they would deign to pick up the pace of modifications on their own:
In a letter Tuesday, [Sen. Sherrod] Brown (D-OH) stated that a number of constituents have contacted his office saying banks are offering limited assistance in helping them restructure their home loans. The senator used the letter to call on banks to do more to help these individuals. “It is in the best interest of your banks to work with responsible borrowers to help them stay in their homes or find other alternatives to foreclosure,” Brown wrote.
As Elizabeth Warren, Chair of the TARP Oversight Panel, said, “for every family that Treasury has helped into a sustainable mortgage modification, ten other families have lost their homes to foreclosure. Foreclosures show no clear signs of abating.” Atrios added, “HAMP was announced with great fanfare, a big budget, and a promise that the program could help millions of homeowners. Instead it’s mostly gouged desperate people, extracting a few more mortgage payments out of them while doing little to help them.”
Treasury has been reluctant to implement substantial changes to the HAMP program, but states across the country are trying other approaches to stem the foreclosure tide, including mediation programs that compel banks to meet with a homeowner before finalizing a foreclosure. And it remains the case that the failure to get a handle on the housing crisis will impair an economic recovery.