Mandelman Covers Treasury’s Message to Bloggers: H.A.M.P. was never MEANT to Stop Foreclosures, only to ‘slow them down’…

31 Aug

Really? H.A.M.P. was never designed to save homes from foreclosures? It was designed to help the banks? Really? Wow; you sure could have fooled us… based on the results… NOT!

AMERICA LOST: Treasury’s meetings with bloggers tells a story that I didn’t want to hear.

I talk to a lot of homeowners from all over the country every single day, and it’s been like that for almost two years now.  Each day, I’ve try to do whatever I can to help those struggling to hold on both financially and emotionally.  They reach out to me looking for answers, and I don’t know what else I could do but help in whatever way I can.

I hear a lot of anger, a lot of fear, and a lot of resignation at America lost.  I write about injustice, rant about intolerance, and fight to stop ignorance.  I try to speak out for people that can’t find their voice at the moment.  A friend called me the other day.  When I answered he said, “Still trying to save the world one homeowner at a time?”  We both laughed.

Yes, I suppose I am, I thought to myself.  It’s what I can do… write and try to help where I can.  I started by writing a few articles in the fall of 2007, and I took my act online in December of 2008 when I started blogging on MSNBC’s Newsvine.  In April of 2009, Mandelman Matters was born and since then I’ve worked seven days a week, and so many hours a day that I’d rather not say.  I’ve written 350 in-depth articles on the political, social, economic and legal aspects of the financial and foreclosure crisis since then.

I figure I’ve probably written at least as many articles as anyone in the country on the foreclosure crisis, HAMP, and loan modifications… and it’s quite possible that I’ve written more than anyone else on those subjects.  I don’t sell advertising or make money on my blog, for the last couple of years its been enough that several thousand homeowners have written to me, saying that I’ve made a significant positive difference.

But, it’s not enough anymore.  And I want those that read my column to know why.

It all started this past August 16th and 18th, when the Treasury Department invited some bloggers to come hear what Tim Geithner and other nameless Treasury officials had to say on a range of topics, including the foreclosure crisis and the Home Affordable Modification Program, HAMP.  The first article I wrote about HAMP was on the night of President Obama’s speech introducing his Making Home Affordable plan to save the housing market, which at the time was already in a free fall.  My headline read: “I’m sorry Mr. President.  That’s just not enough.”

I knew right away that HAMP wasn’t going to work as advertised.  There were a lot of reasons why, but the simple truth is I only needed to hear one phrase to know the program would fail: responsible homeowners.

You see, there’s no such thing as irresponsible homeowners and responsible homeowners.  It wasn’t irresponsible sub-prime borrowers that caused this crisis; it was irresponsible Wall Street bankers that did it.  That’s not to say that there weren’t some number of people who bought a home they couldn’t afford, it’s just to say that those people, a tiny fraction of the whole, didn’t have anything to do with the crisis we seem unable to address, let alone solve.

Yet, just about every single week, I end up having to listen to someone tell me about some 24 year-old with a paper route, who bought a $12 million home on the water with a stated income loan.  I’m sure there are a few of those, but they don’t have anything to do with the crisis.

No, borrowers didn’t cause the crisis that the entire world is struggling through today, bankers did that… Wall Street’s bankers to be specific, but lots of other flavors of banker had a hand in it as well.

Millions of people have lost their homes already, and we’ve only just begun to feel the pain that’s sure to come if we stay on our current course.  Why some people don’t see that is beyond me.  But one thing I know for sure, is that the crisis is being allowed to continue because homeowners have no voice in Washington D.C.

Bankers, on the other hand have thousands of lobbyists and hundreds of millions of dollars in campaign cash to hand out.  So, last year, according to Special Inspector General of TARP, Neil Barofsky’s report, we gave the banks $3.7 TRILLION, while spending something way, way under one percent of that amount on stopping the foreclosure crisis.

The people have no voice because they are ashamed.  They think it’s their fault that they are in a difficult financial position today, and when someone is at risk of losing their home to foreclosure, they tell no one.  Should they hire an attorney and somehow save their home from foreclosure, neither they, nor their lawyer tells anyone.  The banks certainly don’t tell anyone anything. And the crisis goes on, worsening every day.  And the media just keeps writing stories about how economists were surprised at how bad things have become.  But, I can’t help but wonder… are they really surprised?  Or did they know all along how bad things would get?

I also can’t help but wonder why everyone’s so quiet about a crisis that’s far worse than any in my lifetime.  In California, for example, when gay marriage didn’t receive enough votes in the last election, there were people marching in the streets.  But millions lose homes to foreclosure, and not a peep.  Banks pay out hundreds of billions in bonuses after being rescued from insolvency by the U.S. taxpayer, and the most you hear is, something akin to “I don’t think I like that” coming from a distant source.

I was able to get through all of this until last week when I learned of what was said at the meetings between various bloggers and Treasury Department officials.  My friend, Richard Zombeck of Huffington Post and told me about the meetings and sent me a link so I could see for myself what went on.  Then others sent me links to what others had written about what was said during the meetings.  And that was it for me… I stopped writing… for about a week, and maybe a little longer.  What was the point, was all I could say to myself.

It made me sad to know what Treasury Department officials had said about the foreclosure crisis and HAMP… very, very sad.  In fact, I can’t think of another time in history when my government acted as these guys have acted, or are continuing to act today.  They truly do not care about people at all.  They are so shockingly devoid of compassion or empathy that they offend me so deeply that I don’t like thinking of this government as representing my country or I can’t help but feel that my country is lost.

Treasury Department officials said, in no uncertain terms that they knew HAMP wouldn’t save homeowners from foreclosure.  Here’s what was written in Huffington Post’s Shahien Nasiripour’s detailed article on the meeting

The administration knew they’d only reach a fraction of those needing help, the official claimed, and that millions of homeowners would ultimately lose their homes to foreclosures that the administration chose not to prevent. Taxpayer money was on the line, and the administration couldn’t justify spending the amount of money it thought would be necessary to save those homes, the official said.

Nevertheless, HAMP remains the best option — even though it’s reaching fewer borrowers than forecast. Other programs, the official noted, would have been either too expensive or unfair. Homeowners who consciously bought more homes than they could afford shouldn’t be bailed out.

Here’s what Steve Waldman of had to say about the meetings:

Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least.

There were murmurs among the bloggers of “extend and pretend”, but I don’t think that’s quite right. This was extend-and-don’t-even-bother-to-pretend. The program was successful in the sense that it kept the patient alive until it had begun to heal.  And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks.

Policymakers openly judged HAMP to be a qualified success because it helped banks muddle through what might have been a fatal shock. I believe these policymakers conflate, in full sincerity, incumbent financial institutions with “the system”, “the economy”, and “ordinary Americans”.

Treasury officials are not cruel people. I’m sure they would have preferred if the program had worked out better for homeowners as well.  But they have larger concerns, and from their perspective, HAMP has helped to address those.

This led to blogger Atrios of to write the following:

Conning homeowners by announcing a government program designed to help them when in fact it was designed to help the banksters is, in my world, “cruel.”

Felix Salmon, blogging on Reuters, said the following:

HAMP is now coming into focus as a serious failure and cruel one at that.  The problem is that it’s not helping people stay in homes, but merely delays foreclosures. This helped banks weather a foreclosure crush, but raised false hopes among a substantial number of applicants, hundreds of thousands of whom were disqualified, as Felix points out, even though they made their payments on time.

HAMP might well have been a success in the ways that Treasury enumerates — helping out banks on the solvency front, reducing the rate of foreclosures, that sort of thing. It was almost certainly a good idea politically, as well: you don’t hear much about the plight of homeowners being foreclosed upon, these days, certainly compared to the huge amount of noise on the subject around the time that Obama was elected president. The government is perceived to have Done Something, and the circus has moved on.

But it’s still a tragedy that hundreds of thousands of people who signed up for loan modifications — and who made all of their modified loan payments in full and on time — have had their modifications cancelled. Many of those people blame the servicers; Treasury, meanwhile, is more prone to blaming the borrowers themselves, claiming they’re incapable of verifying their income.

My feeling is that even if income hasn’t been verified, servicers shouldn’t simply cancel the loan mods if they’re performing well. And that if that’s what the servicers are doing, the incentives within HAMP have been designed very badly. That’s a Treasury failure, and it’s impossible to credibly spin it as any kind of success.

And, incredibly, they are sticking by HAMP.  Only now Treasury is saying that the benefit is found in spacing out foreclosures, as opposed to stopping unnecessary foreclosures.  Tens of billions to spread out foreclosures in order to help banks take losses… on the backs of ordinary people… American citizens… taxpayers.  Because I suppose the $3.7 TRILLION we gave the banks in 2009 alone wasn’t enough.

Read the Complete Article Here


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  1. Dave in Phoenix

    September 1, 2010 at 1:46 pm

    But for about 90% of 1st mortgages, its the taxpayer not the banks that take the loss in foreclosure via the GSE’s.

    The biggest problem with HAMP is that it is not a law just required under TARP for the bailed out banks.

    Most of the time not getting verification or documents in the banks fault since they “lose” paperwork sent over and over and always seems to get “lost”. Even lost from Congressional offices faxing info for people.

    As one person who had their trial canceled for lack of documents she said she had sent 214 documents since May 2009, including some many times. Now which do they now claim missing. Banks are also applying non HAMP reasons to deny modificatons etc.