Preston Piles On, Slams Hope for Homeowners
Blaming Congress for pushing an ineffective program out to troubled homeowners, U.S. Department of Housing and Urban Development chief Steve Preston slammed the Hope for Homeowners mortgage program in an interview with the Washington Post earlier this week.
"What most people don't understand is that this program was designed to the detail by Congress," Preston told the daily newspaper in an interview. "Congress dotted the i's and crossed the t's for us, and unfortunately it has made this program tough to use."
Preston's a little late to the party on this, of course, as is the way with most politicking -- it's neither brave nor prescient to disparage the program now, two months after it's been put into play, and after just 312 applications have been received for the program. In fact, the most recent data released this week from HUD for the week of Nov. 16-30 show that just 54 H4H applications were received, and none were endorsed. Doubly so for Preston, who is set to leave his post at HUD as the Obama administration takes office in January; the incoming President has tapped New York City’s commissioner of Housing Preservation and Development Shaun Donovan as his replacement.
The $300 billion program was originally estimated to help 400,000 at-risk borrowers refinance into government-endorsed loans.
HousingWire first noted the problems in Hope for Homeowners in an Oct. 31 report, after HUD data showed that fewer than 100 applications had been received for the program during the first 30 days of its availability.
In late Nov., in response to dismal applications under the program, HUD relaxed its criteria to qualify under the program. The changes include increasing the loan to value ratio from 90 to 96.5 percent for some H4H loans, for borrowers whose mortgage payments represent no more than 31 percent of their monthly gross income and household debt no more than 43 percent. HUD also said it would permit upfront payments to subordinate lien holders.
On the other side of the political spectrum, it's not as if Democrats are being shy about heaping their own blame on the failure of the H4H program onto the shoulders Bush administration officials. Barney Frank (D-MA), chairman of the House Financial Services Committee, told the WaPo that Bush officials watered down Hope for Homeowners.
"That's partly their fault," he told the newspaper. "The administration was critical of the program and kept putting pressure on us to make it cheaper and more restrictive. . . . If it hadn't been for the Bush administration's opposition, we would have written it in a better way in the first place."
The bickering over Hope for Homeowners comes as Congress appears set to consider another round of homeowner aid, tied to future provisioning of funding for the Treasury's Troubled Asset Relief Program. Earlier this week, House Speaker Nancy Pelosi (D-CA) said that any effort by Bush administration officials to access further funding via the U.S. Treasury’s Troubled Asset Relief Program must come with a plan to help troubled homeowners stay in their home.
“It was very clearly spelled out in the initial legislation that funds would be used for mortgage foreclosure forbearance,” she was quoted as saying at a news conference by a MarketWatch report.
In other words, H4H may not be the $300 billion lifeboat it had been sold to be, but you can bet Congress will find a way to throw more money at troubled borrowers in the next six months or so.
Write to Paul Jackson at firstname.lastname@example.org.
Don’t miss out: get HW delivered via email
- Current Chg.
- NASDAQ 3498.97 33.722 ^ixic
- S&P 500 1650.51 -4.84 ^gspc
- Volatility Index 14.07 0.25 ^vix
- KBW Mort. Financial Index 32.58 0.39 ^mfx
- MSCI US REIT Index 1024.72 -18.17 ^rmz