The White House is today touting progress on its foreclosure prevention plan. The administration says mortgage servicing firmsβthe largest of which are owned by the big banksβhave offered approximately 55,000 βtrial modificationsβ to struggling borrowers since early March, and have sent letters urging another 300,000 borrowers to apply. These are good numbers, relative to the disastrously low bar set by previous initiatives: The Hope for Homeowners program created by Congressional Democrats last year had modified exactly one loan as of March.
But weβve got a long, long way to go before hitting a more meaningful mark on fixing these bad loans. In April, for the second month in a row, at least 340,000 households got foreclosure noticesβthatβs one in every 374 housing units. Itβs also a 32 percent increase over April of last year. In short, the problem is still growing exponentiallyβand at a considerably faster clip than the modification offers are rolling out.
Suggested Reading
Further, itβs important to note that, contrary to some media reports today, the White Houseβs 55,000 stat counts *offers made*, not completed loan modifications. As Iβve reported, the high-volume, low-cost business models upon which the banksβ servicing divisions are built leave them with neither the personnel nor the systems necessary to successfully walk a borrower from offer to modification. The White House notes some progress on this front, as well, pointing out that Chaseβone of the big three servicers, which control half of the marketβhas added 1,000 people to work on loss mitigation. Itβs unclear whether these new hires are loan modification specialistsβa rare and expensive skillβor people to answer the phones.
Now, to be sure, this is all an awful lot of boring detail. And Iβm increasingly of the belief thatβs the point, politically. We all drowned in the technical details of weapons of mass destruction and βembeddedβ reporting on the war, missing the larger, more straightforward point: The grounds for going to war were shaky at best. Similarly, thereβs a larger, simpler point with foreclosure: Washington has steadfastly refused any policy that forces the banks and their servicing firms to fix the problem they created.
As long as weβre counting the number of letters Wells Fargo mailed in April, weβre not counting the number of homes it mindlessly, needlessly foreclosed upon. And weβre not paying attention to the fact that Congress and the White House rolled over as industry lobbyists killed the single proposal that would have forced them to do better businessβbankruptcy reformβrather than handing them billions more tax dollars to pursue the same, failed business model. Itβs high time we all saw this as a political, rather than economic conversation.
βKAI WRIGHT
Straight From
Sign up for our free daily newsletter.