LAS VEGAS, NV — One in 402 homes here in Nevada is in foreclosure, according to RealtyTrac, making this the 5th hardest hit state in the country.
As the Los Angeles Times ‘s Kathleen Hennessey notes today the Obama campaign “has set up its ‘debate camp’ in something of a metaphor for the nation’s economic woes — and the president’s challenges.” Down the road from the resort are “empty storefronts at a ‘village’ of boutiques and restaurants. Surrounding the hotel where the president is huddling with advisors are scores of recently built condos and homes, each a worth a fraction of its value a few years ago.”
In the last few weeks, previous criticisms of the Obama administration’s housing program from Neil Barofsky, the former Special Inspector General for the Troubled Asset Relief Program, have been amplified by similarly harsh words in a new book from Sheila Bair, former chair of the Federal Deposit Insurance Corporation
Barofsky today told ABC News that the “administration’s housing programs have been an abject failure in all but one aspect, protecting the big banks.”
Bair, a former Senate Republican staffer, recalls in , “Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself,” how she stood with President Obama in Arizona at the beginning of his presidency when he promised one of his new programs “will enable as many as 3 to 4 million homeowners to modify the terms of their mortgages to avoid foreclosure.”
Bair writes “the president was masterful in announcing the program, though I cringed as he threw out what I considered to be wildly inflated numbers on the programs’ impact. Even with our own, more aggressive proposal, we had estimated the number of successful modifications at 2.1 million tops.”
That plan, known as HAMP — the Home Affordable Modification Program -has failed to reach its goal of 3 to 4 million modified loans.
In fact, notes Barofsky, it “has reached only a little more than one-fifth of its goal with more failed modifications (more than one million) than successful ones (825,000).”
Bair writes that “HAMP was a program designed to look good in a press release, not to fix the housing market.” Referring to former National Economic Council director Larry Summers and Treasury Secretary Tim Geithner, Bair writes that “Larry and Tim didn’t seem to care about the political beating the president took on the hundreds of billions of dollars thrown at the big-bank bailouts and AIG bonuses, but when it came to home owners, it was a very different story. I don’t think helping home owners was ever a priority for them.”
HAMP was, she wries, “doomed to failure…What’s more, it cheated borrowers. Because Treasury wanted to demonstrate quickly that huge numbers of borrowers were being modified, it let borrowers enter into ‘trial modifications’ whereby they would start making reduced payments pending completion of all of their paperwork. But many of the borrowers could not provide all of the extensive documentation required by the program, so they would be put into foreclosure even though they had been making timely payments for months!”
Barofsky adds that the Obama administration “also missed a remarkable opportunity to spend more than 250 billion in authorized and obligated TARP dollars (without a single additional vote from Congress) to rescue struggling homeowners and help kick start a housing recovery, and instead chose to let the money sit on the sidelines. If they had only treated the foreclosure and housing crisis with the same ferocity and dedication that they did the banking crisis, we would almost certainly be facing a far better looking economy today.”
You can read more on the Nevada housing crisis HERE and PBS recently profiled Las Vegas casino maintenance man Albert Decall, who paid $395,000 (with $100,000 down payment) for his home, only to see his home value plummet to less than half of what it was worth. Working with lenders through the HAMP program, he saved his house.