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Economic News

Loan modifications fail, Obama asks banks to pony up



The good intentioned programs set forth by the Obama Administration to aid struggling homeowners have failed. Last week, we checked in on the Home Affordable Modification Program (HAMP) and revealed that the rate of failure had accelerated.

The HAMP program promised to relieve three to four million homeowners in America and over a year into the program, barely half a million have actually seen aid. US Treasury Secretary Tim Geithner confirms that the original goal will not be met.

HAMP has spent $840 million of the $29 billion of Troubled Asset Relief Program (TARP) funds with most of the housing programs in TARP not aimed to recover funds, rather acts as a crutch to struggling homeowners.

The goal of helping the struggle of the homeowner is a noble cause, but the programs in place are ineffective, even according to those who helped design them and have failed. The US House of Representatives Financial Services Committees is scheduled to vote next week to kill the programs as the cost can no longer be justified. There will be a subcommittee hearing on the programs on March 2 and an amendment and voting session on the termination bills on March 3.

The programs have failed, now what?

Not one to give up on an agenda, Obama has a new plan already in the works as his old plan gets the guillotine. Obama wants loan servicers to commit to reducing loan balances for underwater borrowers with the costs not carried by investors who bought mortgage-backed securities.

The idea is that this would force the worst offenders of foreclosure blunders to take the loss by writing down the loans they serviced on behalf of Fannie Mae and Freddie Mac. In essence, the Administration is asking loan servicers to come up with their own mortgage modification programs.

If addition, several state attorneys general have claimed they are pushing for loan servicers (particularly the largest) to pay over $20 billion in civil fines based on their bad behavior. These fines would go toward funding local loan modification programs.

Is that really the fix?

So HAMP and other programs fail miserably. Obama tells the banks they’ve been naughty and they need to come up with their own programs and reduce principle on underwater borrowers. Attorneys general tell the bank they’ve been naughty and they’re going to punish them and the fines will go toward the people the bank most wronged.

It seems that the loan servicers failed at keeping their noses clean when the government was handing out free money, how will punishing them civilly or telling them to fix it themselves work if they couldn’t behave in the first place? The loan servicers couldn’t pull it together when the modification money was free, I can’t imagine how they’ll perform any better when they’re being politely asked by the Administration to pony up billions of their own money to help homeowners. This isn’t going to be pretty.

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  1. Pauline Scoggins via Facebook

    February 24, 2011 at 3:31 pm

    simply amazing, eh?

  2. David G

    February 25, 2011 at 8:07 am

    HAMP is the Home Affordable MODIFICATION Program, not the Home Affordable MORTGAGE Program. Check it out.
    HAMP is the unsuccessful step-sister of HARP. HARP, the Home Affordable REFINANCE Program, has in fact been very successful in allowing existing homeowners to access lower rates.The only problem with HARP is that it’s only applied to loans backed by the GSE’s. If the banks had got on board with HARP, the situation wouldn’t be in as much of a mess as it is. HARP was Obama’s plan and it worked. It was also Obama’s plan to buy up MBS’s to drive down rates and that plan also worked. If Obama made a mistake with any of this it was not forcing the TARP banks to go the HARP route instead of just settling for the promise that banks would make a go of HAMP. If BofA and co. had refinanced distressed owners at the recent low rates as per the HARP plan things would look a lot better than they do today.
    Them’s the facts. I’ll leave the politics to you.

    • Benn Rosales

      February 25, 2011 at 8:45 am

      Hi David!

      Corrections for typos are best sent through email, we always enjoy hearing from you. We certainly appreciate the catch and your comment.

      all the best,

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Economic News

Boomers retirement may be the true reason behind the labor shortage

(ECONOMY) Millennials and Gen Z were quick to be blamed for the labor shortage, citing lazy work ethic- the cause could actually be Boomers retirement.



Older man pictured in cafe with laptop nearby representing boomers retirement discrimination.

In July, we reported on the Great Resignation. With record numbers of resignations, there’s a huge labor shortage in the United States. Although there were many speculations about the reasons why, from “lazy” millennials to the number of deaths from Covid. Just recently, CNN reported that in November another 3.6 million Americans left the labor force. It’s been suggested that the younger generations don’t want to work but retiring Boomers might be the bigger culprit.

Why Boomers are leaving the labor force

CNN Business reports that 90% of the Americans who left the workplace were over 55 years old. It’s now being suggested that many of the people who have left the labor force since the beginning of the pandemic were older Americans, not Millennials or Gen Z, as we originally thought. Here are the reasons why:

  • Boomers are more concerned about catching COVID-19 than their younger counterparts, so they aren’t returning to work. Boomers are less willing to risk their health.
  • The robust real estate market has benefitted Boomers, who have more equity in their homes. Boomers have more options on the table than just returning to work.
  • Employers aren’t creating or posting jobs that lure people out of retirement or those near retirement age.

As Boomers retire, how does this impact the overall labor economy?

According to CNN Business, there are signs that the labor shortage is abating. Employers are starting to see record number of applicants to most posted jobs. FedEx, for example, just got 111,000 applications in one week, the highest it has ever recorded. The U.S. Bureau of Labor Statistics projects that the pandemic-induced increase in retirement is only temporary. People who retired due to the risk of the pandemic will return to work as new strategies emerge to reduce the risk to their health. With new varients popping up, we will have to keep an eye on how the trend ultimately plays out.

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?



NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<


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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.



young executives

job openings

Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.


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