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Be bold enough to ask?

I know for many of you reading this blog, you may suspect me to be some crazed wacko blogging away in his underpants in his mothers basement but, that image is far from the truth. When reading what I have to write, just keep an open mind and simply ask, “What If?”

A History Lesson-

Franklin Roosevelt Democratic Nominee for President 1932

“Throughout the nation men and women, forgotten in the political philosophy of the Government, look to us here for guidance and for more equitable opportunity to share in the distribution of national wealth…. I pledge myself to a new deal for the American people. This is more than a political campaign. It is a call to arms.”

The New Deal wasn’t a “deal” at all. More so, it was the foundation of a Progressive agenda to move the nation further and further away from our constitution of individual liberties to a centralized large Government who knows best.

In a “Government Knows Best” effort, the New Deal encouraged private home building and sought to grow the number of people who owned homes. In this effort, the creation of the Home Owner’s Loan Corporation (HOLC) and the Federal Housing Administration (FHA).

Among the many mandates of the HOLC, the one I am going to focus on is the mandate to “Facilitate nationwide lending”. So, what exactly did “Facilitating Nationwide Lending” mean, what influence did it have on America?

It’s very important to understand that HOLC did not lend money. The HOLC bought and refinanced mortgages in default directly from the lenders by issuing bonds that paid out 3 or 4 percent. The HOLC had made 1,021,587 loans, essentially making it the owner of approximately 1/6th of the urban home mortgage debt in the United States.

Doesn’t sound too bad…right? Well, here is where the problem comes into play. It is only successful when the people you refinance can afford the home at the new payment. In a jobless recovery like the one many say we are in now, if you refinance a struggling homeowner’s mortgage but, they have no income to pay for it, you end up back at square one, a foreclosure.

Sounds simple enough….right? Not really because with the HOPE and HAMP programs our government is essentially securing or backing the loan and if the homeowner defaults off the program, guess who is stuck with the bill………………………………….(keep guessing)………………………………….(DING,DING,DING)……….TIME IS UP.

It’s the American Taxpayer!

So, here is the question that I am bold enough to ask.

Why would anyone lawmaker get behind any “bail out” program for the homeowner if in the end, the homeowner still can’t afford the home, it still goes to foreclosure and the tax payer ultimately ends up paying the tab?

By the way, just to be clear, 73%-75% of HAMP / HOPE participants default off the program and end up in foreclosure in the first 3-5 months of participating.

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Comment by Wendy Burns on September 7, 2010 at 10:32pm
I don't mind paying taxes for to help those who can not help themselves, I believe that is what makes us human - compassion. The problem I have with the way our country is being run, is that we are paying taxes for those who refuse, but are able to take care of themselves. I fail to understand how a person earning $30,000 per year believes they can own a $400,000 home - it's not the American gift, it's the American Dream that we Work for.
Comment by George Darrin Patterson on June 27, 2010 at 12:24am
I'm Broker, not a blogger so I really don't where to start. I will say thank you to Mrs Fox for her comments about the default rate.Since the 2001-2008 years are are erased from (His)story, let's just call those the "how did we get here years". I was there, an accessory or accomplice like the majority of us who had any sort of sales volume during that time we were like pigs in mud.We were using the exotic loans and values to support our new found wealth and endeavors. Then the mud dried up and here comes the distressed market.

My current community is a mixed of short sale , foreclosures and new construction, an unhealthy mix for stabilization.I'm sure there is some fraud in the neighborhood, but the majority here went in the homes for the long haul, not anticipating job loss, illness or death(I actually had two neighbors die unexpectedly and one suffer a debilitating stroke over the last 5 years.I know these programs can't and won't help everyone, but if we can help other countries(2-3 wars who's counting.... realitives and friends of the brave men and women) we should try to help our own citizens, the would be the 'American Thing to do.

There are two things for certain death and taxes. I don't cry about paying for taxes for wars and I not going to cry about this. It's ironic that some in our profession criticize the programs , but prosper and profit from their success and failures. Also they are quick to talk about percieved problems, but no solutions. That's my two cents and I will glady pay my taxes on it.
Comment by Cindy Billman, CDPE, SFR, HAFA on June 26, 2010 at 8:07am
Well said Jesse and the American Taxpayer continues to foot the bill! And I just listed another one of those HAMPs as a short sale!
Comment by CECILIA D FOX on June 25, 2010 at 7:53pm
re-default rate is about the same as it always has been 65-75%
Comment by Marqueze D. Williams, Sr, NRBA on June 25, 2010 at 4:49pm
Wow.....

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