Countrywide Financial, a prominent member of the Hope Now Alliance and new division of Bank of America, claims that all the representations it makes to the public about loan repayments and modifications are “puffery” — aka LIES. MSNBC article here. Of course this comes in defense of a lawsuit filed by a borrower in trouble. Rather than do what the HOPE Now Alliance claims, help people stay in homes, Countrywide merely recanted the public statements in court documents to attempt to defeat the claims. More evidence to underscore the Alliance’s sole purpose is about public perception, not reality. More on the Alliance here and here.
Of course B0A just got another $20 billion of federal money making the US taxpayer the largest shareholder of the bank (6 percent). In short, the American people have more money invested in the bank than anyone because of its poor decision-making. Meanwhile the bank admits that its representations are not trustworthy.
Paul Krugman asks a good question – why are we so afraid of nationalizing these institutions? See his column of today here. It is our money, it is our economy these lenders are putting at risk, it is our families they are foreclosing on. TARP (Troubled Asset Relief Program) was created to help we were told. Of course Secretary Paulson of the Bush Administration did not buy a single asset with TARP, but instead just gave it to the banks who promptly pocketed it and continued many of their bonus programs for employees. Now the banks refuse to say where the money went exactly, and are coming back for more.
After Fannie and Freddie got into trouble, we put them into federal control (“conservatorship”). Now, they are starting to improve with foreclosure moratoriums, and improved programs to actually help the people of the United States rather than their own balance sheets. See story here.
So why are these lenders of the Alliance getting away with all this stuff? Because we are too scared to lose them. The liquidation of Lehman Brothers was a test, and it proved that the world ecomony cannot suffer the loss of another big bank. But rather than cut these institutions off, make them live up to their promises and suffer the consequences of their actions, or take them over, we coddle them — like a victim of family violence stays with her batterer. Sure, it is easy to say “that guy is a jerk, leave before it is too late” but it is not easy to do unless you are ready, willing and able to go all the way. We should not blame ourselves for not having the courage to do the right thing up to now. We should just do the right thing now before it is too late.
Filed under: National Foreclosure News
The Hope Now Mortgages are such a good alternative for people that are losing their houses. The only thing we can hope is that Obama push the banks to fund the Hope Now programs. He should require the bailout money to be use to help homeowners in foreclosure as a way to jump start the economy.
If just 50% of the people that qualify for a program ( Hope for Homeowners, FHA Secure, Streamline modification program, etc… HopeNowMortgages.com ) can get it we will save thousands of homes…
Note that President Bush’s Hope for Homeowners program was to have saved at least 400,000 families from foreclosure, and thus far only 25 mortgages have been refinanced using this program. Not 25,000, or even 2,500 — 25 total. President Obama’s new program gives lenders and servicers more incentives so it might work, but at what cost? And how many will be helped this time? These voluntary programs either have no impact or are very costly. If this were the auto industry we would have crammed down the plan, rather than beg plead and bribe the industry to do what it should have done from the beginning — make home loans that are affordable.