AFSCME 3357-HOF'S BLOG

Voluntary Foreclosure Avoidance Programs Not Working
Should "Hope Now" loans be replaced by "Luna" loans?

It seems like just yesterday that George W. Bush came on TV, introducing the "Hope Now" program, and talking about a hotline that you could call to get help with your subprime adjustable mortgage. In George's world, that works really well. The problem is that the world that George Bush lives in and the real world rarely intersect. He might as well have appointed Luna Lovegood the head of his Hope mortgage refinancing program. Perhaps she could see these mythical remedial loan offers. The rest of us can't. Perhaps the "Hope Now" loans should be retitled "Luna" loans. (Perhaps Luna should replace Aphonso Jackson as Head of the Department of Housing and Urban Development.)

According to a study by the Center for Responsible Lending, only 3% of homeowners with adjustable rate subprime loans are likley to receive a streamlined loan modification. Lenders were 13 times more likely to foreclose than modify a problem loan.

Of all the subprime toxic loans that I've seen at UAW-LSP, I've never seen a lender come forward with a modification that we didn't cram down their throat by either suing under TILA or HOEPA, or threatening to sue. There have been occasions where the lenders let the consumers stay in a house for years without making payments for reasons that I don't 100% understand. I believe it's because the loans are securitized and they can't clear up the ownership well enough to sue to get them out.