Editor’s Note: Inman News is pleased to introduce "House Keys," a new weekly column about homeownership by veteran real estate writer Marcie Geffner. "House Keys" offers a fresh look at today’s changing images and perceptions of homeownership through current news events and personal stories. For information about publishing this column on your Web site or in print, contact Elaine Baker: (510) 658-9252 ext. 128.
The U.S. government has started several programs to help homeowners escape burdensome mortgage payments and avoid foreclosure. But so far, these programs have amounted to little more than false hopes.
Programs with catchy names like "Hope for Homeowners" were announced with much fanfare and great promise. In effect, these programs meant that we, the U.S. taxpayers, held out the hope of mortgage relief to our neighbors, both nearby and far afield. We gave them hopes of "staying in their homes," as government officials so often phrased it.
But so far, these programs haven’t delivered even a tiny fraction of the promised relief. The "Hope for Homeowners" program created late last year was supposed to help 400,000 homeowners replace troublesome mortgages with traditional 30-year fixed-rate loans. But as of early 2009, only 25 new loans had been approved. Yes, you read that right: not 400,000. Just 25.
Plenty of people believe that homeowners who can’t afford their mortgage payments don’t deserve government assistance because such aid comes only at the expense of other, presumably more responsible, taxpayers. Indeed, some people are convinced that these greedy, foolish, stupid or just plain unlucky folks don’t deserve any relief whatsoever — not from the government, not from lenders and not even from bankruptcy courts.
Regardless of the merits of that point of view, the fact remains that, like it or not, agree with it or not, some sort of help for these homeowners has been promised. It has been promised repeatedly, and it has been promised by no one other than ourselves. U.S. Us.
Hopes are insubstantial things as light as fairy dust. But not all hopes are alike. Some are realized. Others are disappointed. And some, sadly, are simply false.
Disappointed hopes begin with true possibilities and potentialities, though they may end without any progress toward the hoped-for outcome. Disappointed hopes may even turn out worse than the original situation. But false hopes are a different element altogether. False hopes are non-starters right from the start. False hopes never had any real chance of success. …CONTINUED
The distinction isn’t trivial for homeowners who made major decisions on the basis of the hopes that were held out to them. Perhaps they didn’t sell their home soon enough because they thought we were about to rescue them from their burdensome mortgage payments. And perhaps now their situation has worsened to the point at which they are well and truly stuck.
Their hopes weren’t disappointed because they didn’t try hard enough or their luck had run out. No, their hopes were disappointed because these programs weren’t designed in a way that offered any real chance of the hoped-for results.
What’s ironic or sad, depending on your point of view, is that we gave these false hopes and promises of relief to the same people who relied on our earlier and equally false hopes of homeownership. We showed them houses. We offered them mortgages. We told them homeownership was within their grasp.
Federal officials are easing the requirements for the Hope for Homeowners program, and President Obama has said he also wants to reduce home foreclosures. Will these new approaches be substantially different or more of the same?
An earlier FHA refinance program, FHASecure, helped about 400,000 borrowers with adjustable-rate mortgages refinance into fixed-rate loans insured by the government. Created in August 2007, the program was allowed to sunset at the end of 2008 because of rising losses.
HOPE NOW, a private-sector alliance of mortgage servicers, nonprofit counseling groups and investors, says it helped 248,000 homeowners avoid foreclosure in January. About half received mortgage modifications, which many experts say are more likely to provide long-term relief than repayment plans.
Since July 2007, HOPE NOW claims to have completed nearly 3.5 million loan workouts. The group, which recently rolled out an online application form for troubled borrowers, operates a toll-free hotline at 1-888-995-4673.
The Obama administration hopes to help as many as 9 million homeowners avoid foreclosure through the "Making Home Affordable" loan modification and refinancing program. A dedicated Web site includes tools for determining eligibility.
Some critics have said the Home Affordable program’s guidelines are too narrow. Only borrowers whose loans are owned or guaranteed by Fannie Mae and Freddie Mac will qualify for refinancings, for example.
It’s a mean prank to hold out false hopes like Lucy van Pelt setting up that darn football for Charlie Brown. Our neighbors deserve better. They deserve either a foreclosure prevention program that actually works or a frank admission that we truly don’t intend to help them at all.
Marcie Geffner is a freelance real estate reporter and former managing editor of Inman News.
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