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Sunday, June 5, 2011

Three years after HAMP, unemployed are receiving little help to stay within their homes

Sign of the times - ForeclosureImage via Wikipedia
Thousand of unemployed face foreclosure
signs in front of their former homes, as
programs designed for assistance by the
Obama Administration, offer little to no
help.

One of President Obama’s initiatives with the Home Affordability Modification Program (HAMP) enacted in March 2009, was to help some of the nations’ unemployed job seekers stay within their homes.
 
With HAMP, jobless individuals were allowed submit request to their mortgage companies to postpone payments for three months, with the hopes of finding employment in this time frame. 

Today, the average length of unemployment is now nine months and another group of job seekers, 99ers (who have exhausted all forms of Federal Unemployment Extensions), have been without work for up to three years.

Designed to keep distressed homeowners from falling into foreclosure, HAMP originally aimed at those who took out sub-prime loans or other risky mortgages during the heady days of the housing boom.. These days, the primary cause of foreclosures is unemployment, with up to 13.9 million Americans, seeking work.

Results of the mismatch strategy, has created confusion between the homeowner program’s design and the country’s economic realities. Frankly, HAMP’s efforts to assist unemployed job seekers have been near to a complete failure. 

Plagued by delays, dubious benefits and abysmal participation, as of March 31, there were only 7,397 participants compared to over 13 million jobless individuals.
“So far, I think the public record will show that programs to help unemployed homeowners have not been very successful,” said Jeffrey C. Fuhrer, an executive vice president of the Federal Reserve Bank of Boston to the New York Times.
As the rate of joblessness in America continues to increase, shown by Friday, May 3rd unemployment numbers increasing to 9.1 percent with only 54,000 private sector jobs created the entire month of April, the housing crisis among those seeking employment stand to only become worse.

President Obama’s Trouble Asset Relief Program, known at the TARP bailout, failed to mandate banking institutions to stand behind one of program original intents; to invest the tax payer funded bailout back into stabilizing America’s housing market.

The U.S. Treasury Department was given $46 billion to invest in banks focused on keeping homeowners in their houses. To date, the agency has spent about $1.85 billion on this task and the remaining funds on propping up balance sheets of companies like J.P. Morgan Chase, Wells Fargo and Bank of America.

Morris A. Davis, a former Federal Reserve economist, estimates that as many as a million homeowners slipped into foreclosure because of insufficient help for the unemployed.
“The money was there and they didn’t spend it,” said Mr. Davis, an associate real estate professor at the University of Wisconsin in the New York Times article. “I don’t mean to sound outraged, but I am pretty outraged,” he cited.
Administration officials said their programs have had a positive impact, albeit not as large as they had hoped. They cite the current problems within the housing market of high unemployment and large negative equity on homes can not be easily solved. 

Since programs to curb foreclosure are voluntary, they note the Obama Administration notes they are limited in how far they can push mortgage servicers and investors, who often make more profit from foreclosures than from offering aid.
“We are trying to be careful in designing programs that at the end of the day aren’t just about spending money but getting people back on their feet,” said James Parrott, a senior adviser at the White House’s National Economic Council.
Meanwhile while the Obama Administration are still trying to 'design a workable program' three years after TARP and HAMP, thousands of unemployed job seekers are being placed on to the streets, with little to no income and highly damaged credit scores due to foreclosure procedures removing them from their homes. 


Department of Housing and Urban Development (HUD) received $1 billion dollars as part of the financial regulatory reforms by Congress in 2010 to help unemployed job seekers stay in their homes Funds from this program, were allocated to provide government loans to unemployed homeowners for up to 24 months. 


To date, applications are being accepted in only five states; the others are delayed because of “implementation challenges,” a HUD spokeswoman cited to the New York Times.


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