The Fight for the Middle Class: Obama's Mortgage Relief Program Isn't Working

April 13, 2010— -- 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.