Senators from both Parties Skeptical and Critical about Obama’s Foreclosure Prevention Measures

August 6th, 2009 | Tags: Foreclosure Crisis

obama-rescue-plan

Both Democrat and Republican senators expressed their anger for the failure of the Obama government to contain the increasing flow of foreclosures. Speaking on Thursday 16th July 2009 at hearing of the Banking Committee the senators were occasionally harsh while grilling two officials holding senior posts over the lukewarm results from the anti-foreclosure measure costing $75 billion.

Sen Mike Johanns (Republican) said, “If you can’t tell us what you’re headed to, what you’re goal is in terms of the number of properties you’re going to deal with each month, we’ll be flailing around with this two years from now. It will be regarded as a failed program, a costly failed program.” At the haring he was addressing Assistant Secretary for Financial Stability, Herbert Allison and the HUD’s Senior Advisor, William Apgar.

The situation was described as “disgraceful” by Christopher Dodd (Democrat), Chairman of Senate Banking. It was a shame that so many were continuing to lose homes while the broader economy was failing to recover because of the housing market. In his opening remarks he said, “I’m hoping that, with the stakes this high, somebody can explain to me why nothing has changed.”

Allison defended the position of the government by arguing that considering that the plan had just taken off, already there many positive signs. He added, “We are encouraged by the level of improvement we’ve achieved in the last ten weeks.” He referred to the business as complicated but already many servicers have positively responded and were coming forth. He admitted however that the situation was worsening. He said that hundreds of thousands were sliding into foreclosure per month. He said, “As unemployment is rising, the number is accelerating.”

The programme started in February depending on the government paying lenders and borrowers for agreeing to loan modification under certain conditions. The government has inked 27 agreements with the servicers and offered trial modification opportunity of 325,000 borrowers preceding final modification. But only 160,000 borrowers are running through the trial modification period. Allison is optimistic that the number will pick up speed.

Allison informed that a separate programme has been started to assist about 43,000 borrowers whose loans have gone underwater. This will enable them to shift to more viable loans that will be affordable for them.

The Senators from both parties remained skeptical about Obama’s foreclosure prevention measures.