HUD Finally Figures Out the Obvious About Mortgage Aid
Housing and Urban Development Secretary Steve Preston finally speaks out on something everyone else already knows - that the Hope for Homeowners program isn’t working.
Preston told the Washington Post that the program, created by Congress this summer as part of a mortgage rescue bill, has been a failure. In a particularly bold move, he then blamed all the problems on Congress.
From the Post:
“What most people don’t understand is that this program was designed to the detail by Congress,” Preston said. “congress dotted the i’s and crossed the t’s for us, and unfortunately it has made this program tough to use.”
So. HUD has known the details of this program since it was created last summer - when Congress dictated its terms. Surely, it knew, as everyone else in the housing world did, that early on the program was in trouble. Many econobloggers wrote about Hope for Homeowners getting only 42 applications in its first two weeks, after the program was launched Oct. 1. That would be known as a “red flag,” to most people. HUD also was well aware of the downsizing over the years of the Federal Housing Administration, and concerns that FHA could get the program off the ground.
Cities hit with foreclosures have been well aware of the problems. As TWI reported, the $4 billion that communities will get under that same rescue bill to clean up foreclosures was supposed to be part of a package of aid. That aid was supposed to include government-backed loan guarantees for the refinancing of 400,000 borrowers, under Hope for Homeowners.
But since the refinancings didn’t work out, cities and towns are left with only the $4 billion to clean up the mess - a sum far too small to make much difference.
HUD Secretary Steve Preston probably is right on the mark when he complains that Congress made the program too complicated to work well. He may be correct that Congress shouldn’t meddle that much in a housing program, and that it has no business fashioning the nuts and bolts of loan refinancing.
But Rep. Barney Frank, D-Mass., isn’t a loan processor, either. HUD and its Federal Housing Administration knew early on the difficulties with Hope for Homeowners. Its failure was no secret. The time to speak out was right away, with foreclosure piling up every month.
But as TWI noted on Tuesday, HUD isn’t exactly at the top of its game. It’s not bravery to speak out long after the fact, and then blame someone else. HUD and the FHA are supposed to get things right the first time around - and if they can’t, or if Congress stands in the way, it’s their job to move quickly to fix things.
Now it’s mid-December, and HUD is getting around to speaking up. Wonder how many people who needed help didn’t get it, since the problems with Hope for Homeowners first became clear.