No Room at the Inn - No Mortgage Relief in TARP

Michael Collins

The Money Party December 2, 2010

http://www.themoneyparty.org/main/?p=328

What do you get when you cross Tim

Geithner and Peter Peterson?

Barack Obama; who would rather help the

big banks and balance the budget than offer
a helping hand for struggling homeowners.
(Image)

The president demonstrated new heights of

indifference toward the people in his
handling of the mortgage relief program
made a part of the Trouble Asset Relief
Program (TARP). Citizens paid the full
share for TARP and were to get a modest
proportion. That's not the case. The
November 2010 Congressional Budget Office Report on TARP was just issued. It
showed that the funds for home mortgage assistance programs would be reduced from
$50 billion to $12 billion, as reported in the Huffington Post.

Reading the details of the report, we find that the take back from homeowner relief
through TARP funds is even more outrageous. The actual funds spent so far for
homeowner relief is only $710 million.

The remaining $11 billion "additional funds" billion of will not likely materialize. In his
October 2007 report the Special Inspector General for TARP, Neal Barofsky, noted that,
"HAMP produced a net increase of fewer than 26,000 permanent modifications a month
signaling that the anemic pace of permanent modifications may even get worse" The $11
billion "additional funds" will be treated like the previous $50 billion commitment that
 turned into $11 billion. It is an accounting version of Zeno's Paradox.

In the mean time, AIG got $48 billion and Investment Partnerships another $15 billion,
none of which has been paid back. So the score is AIG/Bankers $94 billion -
Homeowners $0.71 billion. Quite a deal!

Here are the CBO Report figures on the actual beneficiaries of the mortgage relief
programs under TARP. There were 207,000 permanent loan modifications with 28,000
canceled for a net of 179,000 homes saved for citizens. The much publicized trial loan
modification program under HAMP had 1.7 million loans enrolled. Forty one percent of
these were canceled and another 173,000, 10%, are in "limbo" providing no benefit to
homeowners.

Commenting on the Department of Treasury handling of

homeowner assistance, Special Inspector General Neal
Barofsky, said,

"Treasury has steadfastly rejected these recommendations

and now finds itself defending a program that is failing to
meet TARP's goal of 'preserving home ownership.' As a
result, a program that began with much promise now must be counted among those that
risk penetrating public anger and mistrust." Neal Barofsky, Special Inspector General
Tarp Oct 26

Apparently the President missed this

Individual bankruptcies are up significantly. Bankruptcy Data Project The seriousness of
the increase is indicated y the graph below which compares 24 month periods before and
after the hypothesized October 2008 financial meltdown.

Bankruptcies are approaching 140,000 a month and. Banks foreclosed on two million
homes since 2009. But AIG, with several thousand employees has received every cent
allocated while just a fraction of the TARP money intended for mortgage programs has
materialized.

In addition to total bankruptcy increases, Chapter 13 bankruptcies are barely a third of the
total of Chapter 7 and Chapter 13 combined. Chapter 13 offers citizens the chance to
retain their homes and other assets. Chapter 7 is simply a surrender of all assets,
including the family home.

The worse things get the worse they make them

We've got a dead economy, real unemployment approaching 20%, and no bubbles on the
horizon. What's the response?

Give the companies and the people who caused the problem hundreds of billions and the
citizens next to nothing. Act like we're in a recovery and the recession is over. And focus
on balancing that damn budget by cutting the only truly budget neutral program, the one
that pays for itself, Social Security. Start some more wars and create a war on terror side
show by irradiating or groping all commercial airline passengers.

Here's the frightening thing. If you think things are bad now, wait until the new crop of
Republicans takes over the House. The President of the Tea Party Nation, Judson
Phillips, just announced that he favors restricting the vote to property owners only. Of
course, there may be problems with that since the people he thinks are property holders
are really debt slaves to the big banks, the real property owners.
Another chapter in the great decline brought to you by The Money Party.

END

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