The Obama administration’s attempts to deal with the foreclosure crisis have been nothing short of abysmal. As of right now, more than 6 million American homeowners remain under threat of foreclosure, or are behind on their mortgage payments. Property prices are continuing to fall, and inventories across the U.S. are overwhelmed with foreclosed homes.
Obama’s economic people haven’t been sitting idly by of course. They’ve been busying away, racking their brains, coming up with an endless stream of harebrained schemes to rectify the situation. The only problem is, all of these schemes have dismally failed.
Take the Making Home Affordable plan for example. Unveiled back in 2009, the plan was to prevent between 3 and 4 million homeowners from foreclosing, by offering banks incentives to adjust their mortgage terms, so that people could negotiate loan modifications and remain in their homes.
The plan was a complete and utter failure. So far, of the $45.6 billion earmarked as bailout funds, only $7 billion has been spent. Just 816,000 homeowners have successfully managed to refinance their mortgages through the scheme. The program has been wracked by errors, mishandled cases, lost documents and so on. These mistakes have gone unpunished. GMAC, a mortgage services, were reported to have made errors in 80% of cases which were audited by watchdogs. What the mistakes were, nobody knows (they were kept “secret”), but nevertheless GMAC has refused to reverse a single foreclosure so far.
The Home Affordable Refinance Program, designed to allow struggling homeowners to refinance their loans and take advantage of low interest rates, has similarly failed to make an impact. Obama suggested that between 4 and 5 million homeowners would be able to seek help through the program. He was wrong again. So far, just 838,000 homeowners have managed to get refinancing from the program, thanks to its stringent rules. Obama promises that more will be done to make the program more accessible, yet even if he does, many critics say it will do nothing to resolve the foreclosure crisis’ underlying problems.
Yet another great idea was the plan to loan money to unemployed homeowners so they could stave off foreclosure. $1 billion was earmarked for the Emergency Homeowner’s Loan Program, which was delayed and delayed, and then when it finally came out, most homeowners found they couldn’t qualify for it anyway.
Obama’s approach to handling the foreclosure crisis has been, at best, shortsighted and woefully mishandled. The President himself admitted that his approach has been a big mistake. Again and again, his administration has tried to wallpaper over things with “quick fix” solutions that simply prove to be unworkable and impractical. The fact is, there is no “quick fix”. Until the country’s leaders wake up and realize that, I dare say it’s unlikely we’ll ever come up with the “solution” we’re all waiting for.