President Obama's plan to help the 11 million Americans whose homes are underwater isn't working, according to a new report that will be released tomorrow on Capitol Hill by the Congressional Oversight Panel. The plan called for banks to adjust mortgages for homeowners paying more for their homes than they're worth, but most aren't receiving the help they requested. Legislators are already demanding that the big banks to do more, but today, four of the nation's largest banks pushed back.
Citigroup, Bank of America, Wells Fargo, and JP Morgan questioned why they should reduce mortgages for those in over their heads. A JP Morgan representative pointed to the pricetag, saying it would cost $900 billion to help every underwater homeowner.
Middle class advocates say the banks could afford to help more Americans, whose tax dollars helped save the financial industry during the economic collapse. Advocates say no one is asking the banks to adjust every mortgage, and so far, evidence shows that banks haven't adjusted many mortgages at all.
Of the more than 1.1 million homeowners who signed up for mortgage help through the president's adjustment plan, only 170,000 have had their mortgages permanently adjusted. Experts say that's a dismal performance.
"We might not be able to help everyone, but taxpayers bailed out the banks and banks could be doing much more to adjust mortgages," said Elizabeth Warren, a Harvard professor who heads up Congress's Troubled Asset Relief Program oversight panel.
Some lawmakers agree, and they've pressed the big banks publicly on Capitol Hill.
At one recent hearing, Rep. Al Green (D-Texas) became enraged when an executive from Wells Fargo suggested that the bank had significantly reduced the number of homes in foreclosure.
"Well if you have, it seems to me that you would be prepared to talk to us about how you have performed this significant feat," Green said.
"So let me answer it this way. Certainly, there is no question more needs to be done," said the Wells Fargo executive, Mike Heid.
"Sir, more needs to be done?!" exclaimed Green.
Far from the debate in Washington, the financial pain is real for many Americans. Thousands have written to 'World News', sharing their struggles with mortgage providers.
One of those people, Marlo Letterle, wrote from her family farm outside of Chicago to share her story of the "hoops they put you through," filling out paperwork to request a mortgage adjustment for over a year.
At her home today, Letterle said she's still trying to get help.
"You spend nothing but time and time and time on this project," she said. "It's unfair."
But Letterle has a more pressing heavier financial burden to bear -- she's spending tens of thousands of dollars on elderly care for her mother, all while the value of her home has dropped by a third.
Even when presented with tough stories like Letterle's, the banks defend themselves. They ask why they should agree to help some Americans with their mortgages while their struggling neighbors continue to make payments but don't get the same help. A Citigroup representative said today that it's an issue of "fairness."
Homeowners repsond that helping them stay in their homes helps everyone by keeping the neighborhood afloat.
"I don't understand how it's beneficial for me not to be here," said Letterle. "They're going to sell it for pennies on the dollar -- how is it not beneficial to stay here and continue to make payments, even though they're reduced?"