Dispatch from Foreclosureland

Flickr/respres (Creative Commons)


In August, I wrote about the Obama administration’s flawed $75 billion homeowner rescue effort, the Home Affordable Modification Program, and therein introduced readers to Florida homeowner Kristina Page. Page’s mortgage company, Saxon Mortgage Services, first told her it hadn’t heard of HAMP. Then, when Saxon finally admitted Page into the program, it lost her paperwork and told her multiple times to send more copies of the same information even though she knew the name of the employee who’d signed for the originals.

Page eventually made it into HAMP’s trial period, a test run during which she had to make to three lower payments on time to qualify for the permanently lower, more affordable payments. After the test run, Page’s mortgage company, per HAMP’s guidelines, re-examined her financial information and recalculated what her permanent mortgage payments would be. Here’s where, like so many other homeowners, Page ran into trouble. “As I feared,” she recently wrote me, “the permanent payment is much higher than the trial period estimate payments.” On the face of it, her new monthly payment will be $40 less—hardly much help when you consider the mess Page’s been through to participate in HAMP.

It gets worse. Here’s why, in Page’s own words, Saxon gave her higher—and as it turns out, incorrectly calculated—HAMP payments:

I couldn’t figure out how they had our income so high, so as I told you I contested the numbers. Saxon called this morning and I explained my problem. [The Saxon employee] checked into it and called me back with this gem. She said, “The extra income is because there is a letter in your file stating your sister Samantha will be contributing $1300 per month toward your household income”…I am an only child…I don’t have a sister Samantha or any other sister. She [the employee] apologized profusely and even said, “This is all our fault”…I almost dropped the phone.

Page’s case illustrates the biggest issue with HAMP. According to recent data released by the Treasury, there are nearly 730,000 trial modifications underway right now, but only 31,000 permanent modifications have occurred so far. HAMP is worthless if it doesn’t result in permanent modifications for homeowners; those homeowners who go through the trial period but don’t get lasting help are left with wrecked credit scores and the same unaffordable mortgage as before. Meanwhile, foreclosures continue to reach record levels and the housing crisis shows little sign of abating. The Congressional Oversight Panel, led by Elizabeth Warren, got it right when it concluded (PDF) in October that it “increasingly appears that HAMP is targeted at the housing crisis as it existed six months ago, rather than as it exists right now.”

It looks highly unlikely, though, that Congress or the Obama administration plans to change its approach to tackling this crisis. Congress shot down the option of “cramdown”—allowing judicial modification of mortgages in bankruptcy court—with its recent financial regulatory legislation, and the Treasury continues to stand behind its losing program. At this rate, the effects of the foreclosure crisis may stretch out a lot longer than many of us expected.

DOES IT FEEL LIKE POLITICS IS AT A BREAKING POINT?

Headshot of Editor in Chief of Mother Jones, Clara Jeffery

It sure feels that way to me, and here at Mother Jones, we’ve been thinking a lot about what journalism needs to do differently, and how we can have the biggest impact.

We kept coming back to one word: corruption. Democracy and the rule of law being undermined by those with wealth and power for their own gain. So we're launching an ambitious Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption, and asking the MoJo community to help crowdfund it.

We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We want to dig into the forces and decisions that have allowed massive conflicts of interest, influence peddling, and win-at-all-costs politics to flourish.

It's unlike anything we've done, and we have seed funding to get started, but we're looking to raise $500,000 from readers by July when we'll be making key budgeting decisions—and the more resources we have by then, the deeper we can dig. If our plan sounds good to you, please help kickstart it with a tax-deductible donation today.

Thanks for reading—whether or not you can pitch in today, or ever, I'm glad you're with us.

Signed by Clara Jeffery

Clara Jeffery, Editor-in-Chief

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate

Share your feedback: We’re planning to launch a new version of the comments section. Help us test it.