And this if from the New York Times! When they take exception to an Obama policy, you gotta know it stinks:
The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.
Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.
As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.
Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.
All of which, in one form or another, has been said by the critics of the program since day one. Long term readers know that my plan has been (and remains) to “cram down” mortgage balances in line with current market values. Our particular situation was a new departure. We’d had housing bubbles before, but none quite so widespread, so overheated and with such a rapid and deep decline in home prices. Once it happened, there was no way out of it save by just allowing the system to completely collapse or to essentially put the American housing and home mortgage markets through a bankruptcy reorganization. Rather than take either of these courses, the Obama Administration opted for a program which, in effect, had us standing about, hoping that something would turn up to relieve us of the need to pay a price for our profligacy.
Naturally, the government is still maintaining that the program is working as planned. This is because governments naturally have a disinclination to tell the full truth and this natural inclination is now combined with the Obama Administration’s penchant for lying about things. But the facts on the ground tell a grim tale, and unless we take new action, this is going to get really ugly. And don’t think if you’re not one of the “underwater” people that this doesn’t concern you. We’re all in this boat, together, and the only thing some people can say is that it’ll still be a while before the wolf gets to their door.
To me, it still remains that “cram down” is the most sensible thing to do. It would keep as many people as possible in their homes (thus preventing a complete collapse in home prices) while also allowing banks to get a real grip on their genuine balance sheets and allow us, as a whole, to navigate our way back to solvency. We can’t afford to have millions of people either forced out of their homes or, as is becoming increasingly common, just walking away from their “underwater” houses as there is no incentive to stay in a house which may never be worth the purchase price. All elements are coming together – and now in the commercial real estate market – to ensure a decades-long Depression unless we act properly.
This won’t be easy. In fact, it will be quite painful. But we’ve buried ourselves under a mountain of debt and fiat money and there’s no way out except by adjusting ourselves to the fact that we are, as a nation, bankrupt. Bankruptcy is not the end of the world and we still have vast, untapped sources of real wealth in our nation…but we must clear away the dust of fake money and usury and start afresh.
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