Earlier this month, we reported that President Obama's "Making Home Affordable" program, a government subsidized mortgage modification plan, was mired in red tape, delays and questionable benefits for homeowners. But that's not the only area of Obama's housing recovery plan that's struggling. Despite putting a total of $275 billion on housing recovery efforts, Obama's attempts to spur housing markets have sputtered.
Today, both the New York Times and Bloomberg have focused on the kinks in Obama's plan to stabilize the real estate market.
The New York Times zeroes in on Obama's plan to offer homeowners new mortgage deals. As of June, the New York Times reported that Obama's $75 billion homeowner bailout had succeeded in modifying only 100,000 loans nationwide. Under the plan, mortgage servicing companies are offered $1,000 for each loan they modify, plus an additional $1,000 for up to three years. The NYT takes a look inside some of the call centers that are charged with offering mortgage modifications to homeowners. Unfortunately, the results are typical of many call centers. Here's the NYT's assessment:
"...in the four months since the Treasury Department announced the program, millions of new homeowners have slipped into delinquency and foreclosure. For now, progress is constrained by the limited capacities of mortgage servicing companies, said Michael S. Barr, the assistant Treasury secretary for financial institutions. He offered the first signs of the administration's impatience with the institutions that control home loans.
"They need to do a much better job on the basic management and operational side of their firms," Mr. Barr said. "What we've been pushing the servicers to do is improve their infrastructure to make sure their call centers are doing a better job. The level of training is not there yet."
Obama's larger housing recovery plan has done little to boost home-buying, Bloomberg points out today. Banks are still skittish about offering loans to real estate investors, and mortgage lending is currently at a 13-year low. Bloomberg quotes Eric Belsky, executive director of Harvard University's Joint Center for Housing Studies as saying that Obama's $8,000 tax credit for first-time home buyers has failed to significantly help the market.
Undercutting any other signs of hope in the housing market, are some troubling fundamentals. Here's Bloomberg's round-up of the data:
"Personal bankruptcies rose 37 percent in May from a year earlier, according to the American Bankruptcy Institute, based in Alexandria, Virginia. Credit card defaults in the first quarter went to 7.79 percent from 4.83 percent a year ago, Federal Deposit Insurance Corp. data show. While the share of loans entering foreclosure moved to 1.37 percent, the highest ever, the first-quarter mortgage delinquency rate climbed to a record 9.12 percent, the Washington-based Mortgage Bankers Association said.
About 20.4 million of the 93 million houses, condos and co- ops in the U.S. were worth less than their loans as of March 31, according to Seattle-based real estate data service Zillow.com."
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