$25 Billion Mortgage Relief Program Hasn’t Worked Out So Great

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Remember that $25 billion mortgage settlement with five big banks last year? The idea was to use the money to help underwater homeowners, and the best way to do that is via debt forgiveness. So how did that work out? A new report from UC Irvine law professor Katherine Porter, who was appointed to study the issue by California’s attorney general, says that the program hasn’t worked out so great:

The vast majority of the aid to borrowers, it turns out, came in the form of short sales and forgiveness of second mortgages. Just 20% of the aid doled out under the national settlement went to forgiveness of first-mortgage principal, the kind of help most likely to keep troubled borrowers in their homes. In terms of borrowers helped, just 15% of the total received first-mortgage forgiveness

The five banks collectively delivered twice as much aid using short sales, in which owners sell their homes for less than the amount owed and move out, with the shortfall forgiven.

….Bruce Marks, founder of Neighborhood Assistance Corp. of America, a major housing counseling group, had a [harsh] assessment of the lack of aid to keep people in their homes. “It just shows you that the banks are running the government,” Marks said. “There’s virtually no benefit to borrowers, and yet you give the banks credit for short sales and getting second liens wiped out — something they were going to have to do anyway.”

In the end, this was better than nothing, but not nearly as good as it could have been. I’d be rich if I had a nickel for every time I’d said something like that.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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