Most federal assistance programs are a waste of money. They set up an entrenched bureaucracy that drains taxpayer resources and provide little economic return. 
There are exceptional government programs that deliver great benefit at little cost to taxpayers, but the foreclosure counseling services are not one of those programs. Most of these borrowers are hopelessly underwater or overextended. The counseling might have done some good before they got into this mess, but at this point, telling them what they should have done differently isn’t going to help.
Programs like this are created as political cover to deflect criticism that the government is not doing enough. There is little or no hope these programs will have positive outcomes for anyone involved. Most of the borrowers who “benefit” from these programs get sold into slavery for a lifetime to “save” a house they would be better off losing in foreclosure. These programs are a sham, and they should be eliminated.
Harder-Luck Foreclosures Grow as Funding Wanes
By Emma Fidel on August 07, 2012
… Last November, Congress also appropriated $45 million for housing counseling in fiscal year 2012 through the Department of Housing and Urban Development after slashing all counseling funding during April budget negotiations. HUD had requested $88 million.
Veto Threat
The House passed a 2013 HUD appropriations bill in June allocating $45 million to housing counseling, $10 million less than HUD requested. The bill is now stalled in the Senate, and the White House has said President Barack Obama plans to veto the bill if passed in its current form. …
“The housing counseling community needs to work to restore federal funding,” said David Berenbaum, chief program officer for the National Community Reinvestment Coalition. “Housing counseling organizations have had to downsize across the country at a time when the demands on service are at an all-time high.”
They should be downsized out of existence. These services are part of the amend-extend-pretend charade. Banks need to foreclose on these people and be done with it. Most of these people have been struggling for five years. At this point, a foreclosure is a mercy killing.
Repeat Defaults
Counselors say they have noticed three trends in homeowners seeking counseling in the past year: First, clients like Brown have been stuck in the process longer through multiple defaults and modifications. … and agencies are helping homeowners “who have much harder-to-rectify cases.”
At this point, they are just helping people game the system for more free housing.
Unemployment or Crisis
“It’s not just a low-income problem,” Richardson said. “We’re seeing folks who are middle- and upper-income as well, where loss of employment has been the catalyst, or a family crisis or some other emergency has triggered the problem.”
The situation was triggered by buying too much house.
“The fact that they’re current does not mean they’re not struggling,” Fuhrman said. He estimated that 50 percent of the foundation’s clients are current on their mortgages, compared with 30 percent last year.
More than half their clients are squatting until foreclosure.
Services Free
Counselors repeatedly stress to clients that they shouldn’t pay for counseling, since HUD-approved services are free. …
Which is why they keep petitioning for more government funds.
Outcomes Improved
Counselors point to a number of studies that indicate counseling’s effectiveness. A December 2011 Urban Institute report conducted for NeighborWorks America found that while 9 percent of homeowners cure their serious delinquencies or foreclosures after 12 months without counseling, that number nearly doubles to 17 percent with counseling. …
An 83% failure rate is a sign of success?
Budgeting Help
Counselors might suggest that clients stop paying for cable television or keep better track of how much they spend on groceries, Godfrey said. They usually guide a client through paperwork and may contact the servicer about a modification on the client’s behalf. …
You can imagine one of those counseling sessions, can’t you?
When a client cannot stay in his or her house, a counselor’s guidance and support can help borrowers make a smooth transition to a smaller house or out of homeownership, counselors said.
“Just by simply engaging us in the process, they will see a lot more successes,” said Katherine Peoples-McGill, founder and executive director of HPP CARES. “Sometimes it’s just having a person in front of you to say, ‘Hey, this is not going to work’.” …
We need counselors for that? Didn’t a representative of the bank tell them the same thing? Perhaps the banks should put more kind words of sympathy in their get-out-of-our-house letters? We need kinder and gentler banks, right?
Because HUD-approved agencies don’t charge for their services, they rely on HUD and private donors for funding. The $55 million HUD requested from Congress for FY 2013 would directly fund housing counseling for 185,000 families and training for 4,800 counselors, according to HUD’s proposal.When Congress zeroed out housing counseling funds in 2011, banking groups including the Mortgage Bankers Association pushed for restored funding. William Killmer, the association’s senior vice president of legislative and political affairs, wrote to the Senate Committee on Appropriations supporting “the great work facilitated by this program.”
Perhaps it will die this time around. The last thing we need is another entrenched bureaucracy which accomplishes nothing.
Value Unquestioned
“I do feel we’re at a point now where it is no longer a question, the value of the nonprofit space in providing these services,” Richardson said.
LOL!
ROFLMAO!
I wonder if Mr. Richardson said that with a straight face?
Even so, counselors predict a bleak outlook for homeowners in the coming years and say client numbers will remain relatively static until at least 2014.
Client numbers will remain steady until lenders get serious about clearing out the shadow inventory.
As many as 3.6 million mortgages are expected to enter foreclosure, short sale or distress through 2013, according to a Bloomberg Government study published July 13.
HPF, whose HOPE Hotline has received an average of 1.3 million calls a year since 2007, estimates it will continue receiving at least 1 million calls per year, according to Fuhrman.
“The role of housing counselors is only going to grow,” Berenbaum said.
Not if we can manage to kill off these programs first.
Five years squatting — a new record!
As the housing bust drags on, so does the amount of time delinquent mortgage squatters get to live in their houses payment-free. The former owners of today’s featured property got to squat longer than anyone I have seen so far. The quit paying something in the first half of 2007, a little over a year after their last Ponzi refinance. The lender didn’t foreclose on them until 2/3/2012, almost five years later.
Were you paying for your housing over the last five years. These people weren’t.
Document Type: Notice of Sale
Foreclosure Record
Recording Date: 03/04/2008
Document Type: Notice of Default
Foreclosure Record
Recording Date: 10/18/2007
Document Type: Notice of Rescission
Foreclosure Record
Recording Date: 09/04/2007
Document Type: Notice of Default
- This property was purchased for $235,000 back in 1993. I don’t have the original loan information, but based on subsequent refinances, the likely put 20% down.
- On 10/29/1998 they obtained a $36,231 stand-alone second.
- On 10/15/2002 they refinanced with a $300,700 first mortgage.
- On 12/18/2003 they refinanced with a $360,000 first mortgage.
- On 1/6/2005 they refinanced with a $426,000 first mortgage.
- On 1/3/2006 the refinanced with a $490,000 first mortgage.
Total mortgage equity withdrawal was at least $265,000 plus their original down payment. Not a bad take, particularly when you factor in the benefit of nearly five years of squatting.
What should this guy be counseled to do?
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Proprietary OC Housing News home purchase analysis
6272 ANTHONY Ave Garden Grove, CA 92845
$449,900 …….. Asking Price
$235,000 ………. Purchase Price
2/3/1993 ………. Purchase Date
$214,900 ………. Gross Gain (Loss)
($18,800) ………… Commissions and Costs at 8%
============================================
$196,100 ………. Net Gain (Loss)
============================================
91.4% ………. Gross Percent Change
83.4% ………. Net Percent Change
3.3% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$449,900 …….. Asking Price
$15,747 ………… 3.5% Down FHA Financing
3.55% …………. Mortgage Interest Rate
30 ……………… Number of Years
$434,154 …….. Mortgage
$112,890 ………. Income Requirement
$1,962 ………… Monthly Mortgage Payment
$390 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$112 ………… Homeowners Insurance at 0.3%
$452 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$2,916 ………. Monthly Cash Outlays
($293) ………. Tax Savings
($677) ………. Equity Hidden in Payment
$18 ………….. Lost Income to Down Payment
$132 ………….. Maintenance and Replacement Reserves
============================================
$2,096 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$5,999 ………… Furnishing and Move In at 1% + $1,500
$5,999 ………… Closing Costs at 1% + $1,500
$4,342 ………… Interest Points
$15,747 ………… Down Payment
============================================
$32,086 ………. Total Cash Costs
$32,100 ………. Emergency Cash Reserves
============================================
$64,186 ………. Total Savings Needed
The property above is available for sale on the MLS.
Contact us for a comparative market analysis, a cost of ownership analysis, or information on how you can make an offer today!
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$510,000 6121 LENORE Ave |
0.41 miles 5 bd / 1.75 ba 1,853 Sq. Ft. |
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$425,000 13022 EDWARDS |
0.45 miles 4 bd / 2 ba 2,000 Sq. Ft. |
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$429,000 6411 MOHAWK Dr |
0.49 miles 4 bd / 1.75 ba 1,700 Sq. Ft. |
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$495,000 6161 DUDMAN |
0.55 miles 4 bd / 1.75 ba 1,622 Sq. Ft. |
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$435,000 13392 LEE Dr |
0.59 miles 4 bd / 1.75 ba 1,593 Sq. Ft. |
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$459,000 5591 MEINHARDT Rd |
0.67 miles 4 bd / 1.75 ba 1,593 Sq. Ft. |
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$550,000 13660 EASTBRIDGE St |
0.69 miles 4 bd / 3 ba 1,770 Sq. Ft. |
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$489,999 13669 KINGSBRIDGE St |
0.72 miles 3 bd / 2.25 ba 1,880 Sq. Ft. |
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$599,000 6405 SAIPAN St |
1.28 miles 4 bd / 2.75 ba 2,131 Sq. Ft. |
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$475,000 5831 CAMPHOR Ave |
1.32 miles 4 bd / 2 ba 1,617 Sq. Ft. |
21 Responses to “Foreclosure counseling is a bureaucratic waste that should be eliminated”
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Is a credit re-pricing event brewing just below the surface? If so, the sellers window is about to be slammed shut.
If You Own US Debt Sell It Now
More deep thoughts from Elliott:
On QE and the nanny state:
Printing money and overstaffing government offices may look like growth for a period of time, but it is actually the road to poverty, corruption and, ultimately, political upheaval.
On regulation:
Opaque, overleveraged and vulnerable Financial Institutions which need to be propped up by the implicit or explicit guarantee of sovereigns does not make for a solid financial plumbing system for the global economy…this is a formula for power entrenchment, favoritism and shady deals behind closed doors.
http://www.zerohedge.com/news/elliott-management-we-make-recommendation-our-friends-if-you-own-us-debt-sell-it-now
What stops the federal reserve from buying the debt at inflated prices to maintain interest rates? Even if no foreign buyers want our overpriced debt, the federal reserve can always print the money to buy it until inflation finally forces them to stop.
And once we have some inflation, the fed will wait until everyone is having a great time at the party before taking the punch bowl away.
Will they be able to get everyone to leave once the fights break out, well we still have Volcker around for that.
1) USD can only be devalued up to a certain point because unbacked fiat is a 100% faith-based monetary system. LOL
2) why would the powers-that-be totally destroy the very ‘thing’ that gives them their power? By doing so, their pensions, vsrious income streams and other self-interests would become worthless.
Nontheless….
1) the bond market is the BIGGEST of ALL markets.
2) Around the globe, who are the people demanding govt’s implement austerity and raise taxes vs printing infinitas? Bondholders. Why are they demanding this? They want to be paid back and NOT in devalued paper.
Then shouldn’t mortgages rates go sky high? If an investor is going to loan me money in US dollars to purchase a house. And those US dollars are devaluing, therefore the investor is going to demand a much higher rate or return for devaluing risk in my mortgage.
I can see IR point that US will purchase it’s own debt thereby keeping the rates low until inflation just gets too bad. However, the investor in the US mortgage is going to demand a higher rate of return at the beginning of this process.
“However, the investor in the US mortgage is going to demand a higher rate of return at the beginning of this process.”
The federal reserve has shown a willingness to buy mortgage-backed securities directly. They can keep mortgage rates low if they want to.
OK, I think I finally understand the process. The Fed will purchase US debt AND mortgages. They can come in a flood of money drive down the rates across the board.
Wow, that some major market intervention.
Has this every happened before?
puhleeeeeeze!!
Nobody Is Bigger Than The Bond Market; Not Even The Fed
http://seekingalpha.com/article/295225-nobody-is-bigger-than-the-bond-market-not-even-the-fed
“Around the globe, who are the people demanding govt’s implement austerity and raise taxes vs printing infinitas? Bondholders.”
Is this the first time el O has been optimistic?
“Has this every happened before?”
Prior to the economic crisis of 2008, the federal reserve had never bought or sold anything other than short-term us Treasuries. So, no, never in history has the Fed bought longer term Treasuries or mortgage-backed securities. In fact, back in 2007, the idea that the Fed would do these things was inconceivable. It was also inconceivable that the government would take over the GSEs, but that happened too.
The new wrinkle on amend-extend-pretend.
CitiMortgage to Launch Home Rental Program as Foreclosure Alternative
CitiMortgage announced the launch of the Home Rental Program, a program designed to provide an alternative to foreclosure and allow eligible borrowers to stay in their homes.
The Home Rental Program will be managed by Carrington Capital Management, LLC and Carrington Mortgage Services, LLC. CitiMortgage and Carrington developed the program as a pilot.
Under the program, the eligible borrower transfers ownership of the property to a vehicle established by Carrington Capital and its joint venture partner, Oaktree Capital Management, L.P. A lease will then be established for the property at a manageable monthly payment.
Lease payments will be determined by local market rates but are expected to be lower than the borrower’s mortgage obligation. Carrington will work with borrowers to establish a length for each lease.
The program will be tested in six of the hardest-hit markets to evaluate its effectiveness: Arizona, California, Texas, Florida, Nevada, and Georgia. Carrington will contact homeowners who meet eligibility requirements.
In order to be eligible for the program, candidates must: Occupy the property; owe more than their home is worth; be delinquent for 120 days; and be unable or ineligible to receive an affordable loan modification while still having the resources to make monthly rent payments. In addition, candidates must have a loan in the pilot portfolio serviced by Carrington.
To implement the program, CitiMortgage has transferred the ownership of loans in its portfolio through the sale of $158 million in mortgages to the Carrington/Oaktree partnership.
“We’re looking forward to working on this important initiative with CitiMortgage and our partner, Oaktree Capital Management,” said Bruce Rose, founder and CEO of Carrington. “Offering alternatives for borrowers looking to stay in their homes and simultaneously relieving their distress is core to the operating principles of our firm and will help substantially in the overall housing market recovery.”
Lanzner jumps on the bankwagon and calls the bottom.
Lansner: Home prices have hit bottom
How hard is it to say “bottom” and “home prices” in the same sentence?
Apparently, more difficult that one could imagine. Analysts and financial journalists alike struggle to firmly state that the long national pain of housing depreciation has come to an end. No, we’re not remotely even speculating about “appreciation” — just a simple “bottom.”
The chief economist at online property tracker, Stan Humphries, seemingly went out on a limb with his recent pronouncement of a bottom: “It seems clear that the country has hit a bottom in home values … The housing recovery is holding together despite lower-than-expected job growth, indicating that it has some organic strength of its own. Of course, there is still some risk as we look down the foreclosure pipeline and see foreclosure starts picking up. This will translate into more homes on the market by the end of the year, but we think demand will rise to absorb that, particularly in markets where there are acute inventory shortages now. Looking forward, we expect home values to remain relatively flat as the market works through a backlog of foreclosures and high rates of negative equity.”
Yes, there are risks out there. (Tell me, when did “economic certainty” exist?) And, yes, we had a home-price recovery false start two years back. But let’s look at what some recent home-price indexes are showing:
•The Zillow Home Value Index rose 0.2 percent in the second quarter vs. 2011 — first gain on an annual basis since 2007. (Zillow math is based on its own valuation of many U.S. homes.)
•The Federal Housing Finance Agency’s monthly House Price Index for May was up 3.7 percent vs. a year ago — fourth consecutive gain and the largest since 2006. (FHFA math is based on using purchase prices of houses with mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac.)
•The S&P/Case-Shiller 10-city price index rose 2.2 percent from April — tied for 2nd biggest month-to-month advance ever in this benchmark with a history dating to 1987. (S&P math tracks gains and losses on properties sold.) In July 2004, the S&P’s 10-city price index enjoyed its monthly best upswing of 2.3 percent. S&P’s 10-city price index did fall at a 1.0 percent annual rate in May, and while it’s the 19th consecutive dip — it’s also the smallest year-to-year drop since November 2010.
•CoreLogic found home prices nationwide, including distressed sales, increased in May on a year-over-year basis by 2 percent and 1.8 percent, month-to-month — the third consecutive increase shown for both benchmarks. CoreLogic math is much like S&P’s.
•And we’ll toss in this nugget: DataQuick’s simple tracking of the median selling price in 98 major cities shows buyers paying 7 percent, year-over-year, in late July.
That would seem to be plenty of evidence of a bottom — but in today’s seemingly jaded economic world, it’s clearly not enough. So, what might they be saying?
•S&P’s David Blitzer noted, “We need to remember that spring and early summer are seasonally strong buying months so this trend must continue throughout the summer and into the fall. … June data for existing home sales, new home sales, housing starts and mortgage default rates were a bit mixed, but all are better than their year-ago levels. The housing market seems to be stabilizing, but we are definitely in a wait-and-see mode for the next few months.”
•The economists from IHS Global Insight were also skeptical, noting the seasonal worry as well as bigger-picture angst: “It would be premature to conclude that the recent rise in home prices precludes future monthly price decreases. Indeed, the housing sector recovery is very dependent on the labor market. Should the US economy weaken in coming months and payroll gains falter, one would expect the number of foreclosures working their way through the pipeline to push home prices down. The most likely scenario is that home prices will zigzag over the coming months, rising during the selling season, and slipping in the fall. Overall, IHS Global Insight expects home prices to cautiously start moving up in 2013.”
•CoreLogic CEO Anand Nallathambi: “The recent upward trend in U.S. home prices is an encouraging signal that we may be seeing a bottoming of the housing down cycle. Tighter inventory is contributing to broad, but modest, price gains nationwide and more significant gains in the harder-hit markets, like Phoenix.”
Even locally, we’ve seen a firming of prices.
DataQuick’s monthly median selling price hit a new post-crash high in June — up 14 percent since December (and 1.8 percent in a year) to $455,000. And the S&P index for Los Angeles and Orange counties in May found home prices falling at a 2 percent annual rate — and while it’s the 18th back-to-back decline — it’s also the smallest year-to-year drop since March 2011.
Look, home prices – at worst — have essentially gone nowhere for roughly two years. That doesn’t make anybody rich — but when prices plunged by a huge chunk … then look to be starting a modest upswing … with many folks foreseeing the possibility of future gains …
That’s a bottom!
If you say so…
“… IHS Global Insight expects home prices to cautiously start moving up in 2013…”
Based on what? Wishful thinking? Fed fund rates going negative?
I would like the folks at IHS to explain were Joe Average is going to get cash money to service all this new debt (in the form of higher prices) as well as existing debt (in the form of existing over-leverage).
If IHS thinks wages are going to rise, they are asleep in wild rivers dreamland.
Global Wage arbitrage will guarantee the same (or even declining) wages for the foreseeable future.
If anyone has different information, I would sure like to hear about it.
Has anybody notice the 10-year US Treasury Note creeping back up?
“There are exceptional government programs that deliver great benefit at little cost to taxpayers”
Really?
I was being kind. I couldn’t think of one either when I wrote that.
IR, you need to be declared an industry.
Obama: Let’s repeat auto industry success with every manufacturing industry
By DONOVAN SLACK | 8/9/12 2:18 PM EDT
PUEBLO, Colo. – President Obama, while villifying Mitt Romney for opposing the auto industry bailout, bragged about the success of his decision to provide government assistance and said he now wants to see every manufacturing industry come roaring back.
“I said, I believe in American workers, I believe in this this American industry, and now the American auto industry has come roaring back,” he said. “Now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry.
“I don’t want those jobs taking root in places like China, I want those jobs taking root in places like Pueblo,” Obama told a crowd gathered for a campaign rally at the Palace of Agriculture at the Colorado State Fairgrounds here.
He made the remarks while pushing for the renewal of a tax credit for wind energy manufacturing – something Romney opposes – and for the creation of credits for companies who bring jobs home from overseas, as well as the elimination of loopholes for offshoring.
“Gov. Romney brags about his private sector experience, but it was mostly invested in companies, some of which were called ‘pioneers of outsourcing,’” Obama said. “I don’t want to be a pioneer of outsourcing. I want to insource.”
The world has come full circle. We should embrace communism to counteract the failings of capitalism? I don’t think so.
via Jim Sinclair
COSTELLO: I want to talk about the unemployment rate in America .
ABBOTT: Good Subject. Terrible Times. It’s 9%.
COSTELLO: That many people are out of work?
ABBOTT: No, that’s 16%.
COSTELLO: You just said 9%.
ABBOTT: 9% Unemployed.
COSTELLO: Right 9% out of work.
ABBOTT: No, that’s 16%.
COSTELLO: Okay, so it’s 16% unemployed.
ABBOTT: No, that’s 9% .
COSTELLO: WAIT A MINUTE. Is it 9% or 16%?
ABBOTT: 9% are unemployed. 16% are out of work.
COSTELLO: IF you are out of work you are unemployed.
ABBOTT: No, you can’t count the “Out of Work” as the unemployed. You have to look for work to be unemployed.
COSTELLO: BUT THEY ARE OUT OF WORK!!!
ABBOTT: No, you miss my point.
COSTELLO: What point?
ABBOTT: Someone who doesn’t look for work, can’t be counted with those who look for work. It wouldn’t be fair.
COSTELLO: To whom?
ABBOTT: The unemployed.
COSTELLO: But they are ALL out of work.
ABBOTT: No, the unemployed are actively looking for work. Those who are out of work stopped looking. They gave up. And, if you give up, you are no longer in the ranks of the unemployed.
COSTELLO: So if you’re off the unemployment rolls, that would count as less unemployment?
ABBOTT: Unemployment would go down. Absolutely!
COSTELLO: The unemployment just goes down because you don’t look for work?
ABBOTT: Absolutely it goes down. That’s how you get to 9%. Otherwise it would be 16%. You don’t want to read about 16% unemployment, do ya?
COSTELLO: That would be frightening.
ABBOTT: Absolutely.
COSTELLO: Wait, I got a question for you. That means there are two ways to bring down the unemployment number?
ABBOTT: Two ways is correct.
COSTELLO: Unemployment can go down if someone gets a job?
ABBOTT: Correct.
COSTELLO: And unemployment can also go down if you stop looking for a job?
ABBOTT: Bingo.
COSTELLO: So there are two ways to bring unemployment down, and the easier of the two is to just stop looking for work.
ABBOTT: Now you’re thinking like an economist.
COSTELLO: I don’t even know what the hell I just said!
ABBOTT: Now you’re thinking like a politician.
This is a pretty one-sided post. The HUD counselors are providing a tangible benefit, so the debate should really be framed as “Is it worth the cost to taxpayers?”. Probably not, but without a comprehensive study, who knows for sure.
I’ve referred people to the HUD counseling program several times throughout the years, often times anonymously through these housing blogs. The response has always been one of gratitude. Not everybody is as smart about housing and banking as people like the readers of this blog are. Often times people feel lost and hopeless, which leads them to pay money to crooked attorneys promising to solve all their problems, just before they skip town. The main inefficiency with HUD counseling is that the people that really need it don’t know it exists. Therefore, I’m betting much of the money allocated to the program is wasted.
On the other hand, telling people how stupid they were for getting a ponzi loan is also a waste. The people that sincerely want to keep their HOME already know they made a mistake. What they need is help avoiding any further mistakes. Rooting for the banks to hurry up and foreclose on these idiots is really simplistic thinking. This situation is far more nuanced than that. I think only somebody that has helped people with their housing situation and heard stories of terminal illness, death of a spouse, loss of income, divorce, and so on, can appreciate what people are going through. Yes there are also plenty of people gaming the system, and that is equally depressing.
So I guess it comes down to…Do we punish the undeserving along with the deserving, or do we instead help those that are suffering at the risk of also helping scammers?
[...] at this point, telling them what they should have done differently isn’t going to help. – OC Housing News ———— (what if no QE3?) The Jackson Hole "fix" is not coming [...]