Make us your home page
Instagram

Making Home Affordable is aiding few homeowners

As a super hero, the government's about as nimble as a brontosaurus.

Case in point: More than 62,700 Tampa Bay properties got foreclosure notices last year. About 2,720 distressed property owners have benefited fully from the government's leading anti-foreclosure program.

When you reach just 4 percent of homeowners in financial peril, it's tough to trumpet your success, though I'm sure the lucky one-in-25 are grateful for the helping hand.

We're talking about Making Home Affordable, launched a year ago with hopes of helping up to 4 million distressed homeowners. If your monthly mortgage exceeds 31 percent of income, the government subsidizes banks to modify the loan, usually by lowering interest rates.

In a surge of interest starting this past summer, at least 15,577 Tampa Bay residents signed up for the program. To qualify, homeowners have to cite a hardship, the most frequently mentioned being loss of income.

If the homeowner successfully makes his newly lowered house payment during a three-month trial, the loan modification becomes more or less permanent.

Florida's success rate is as dismal as Tampa Bay's. About 21,100 mortgages have been permanently modified out of 123,144 applicants for Making Home Affordable.

The housing market was pleading for a stronger antidote. Bank of America, the nation's largest retail bank, answered the call this week. It says it will start forgiving loan principal on tens of thousands of underwater mortgages. Other banks will certainly follow the lead of the big wheel from Charlotte.

Making Home Affordable contains a loan forgiveness provision, but it's strictly a break-in-case-of-emergency measure used only when interest reduction and time extensions fail.

Here's where things get messy.

Though it's underperforming, Making Home Affordable makes a claim to fairness when it slashes a homeowner's mortgage rate from, say, 7 percent to 4.5 percent. In a non-depreciating market, those folks, with sufficiently good credit, would have been able to refinance at market rates hovering around 4.9 percent. By essentially letting Washington be co-signer of their loans, homeowners borrow cheap money already in circulation.

Outright loan forgiveness is another matter. It rewards one of the worst practices of the last housing boom: buying overpriced homes with little or no money down. It's a big reason half of Tampa Bay homeowners with mortgages owe more on their loans than their homes are worth.

Consider the wise home buyer who sold his old house in 2004 and poured $100,000 of his savings into a new house. He's not looking so wise anymore. Depreciation has probably wiped out his $100,000. But he's not so deeply underwater as to catch the attention of the D.C. Debt Forgiveness League.

But Washington is eager to play up its successes among the distressed homeowners who have attracted its help. In announcing Making Home Affordable last year, the U.S. Treasury bragged it would help as many as 4 million financially flailing homesteaders.

But observe this footnote on the most recent program update: Even tens of thousands of borrowers rejected during their trial periods, some for nonpayment, were counted as "helped."

I can hear it already: We tried to pull you lard butts off the precipice, but we lost our grip.

Making Home Affordable is aiding few homeowners 03/25/10 [Last modified: Thursday, March 25, 2010 10:04pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Trigaux: Amid wealth inequality, is middle class losing habit of giving to charities?

    Business

    In the slow economic recovery since the nasty recession a decade ago, researchers are wondering if the hard times back then broke middle class America's habit of charitable giving.

    Dr. Kiran Patel and his wife and fellow doctor Pallavi Patel rank among the most generous philanthropists in the Tampa Bay area in recent decades. Their most recent giving: a $200 million pledge, consisting of a $50 million gift to Nova Southeastern University, plus $150 million to buy and build a Nova-affiliated medical education complex in Clearwater. The Patels also have given considerable sums to the University of South Florida and area hospitals. In this 2014 photo, the couple pose for pictures on the green carpet prior to a 15th International Indian Film Academy Awards event in Tampa. [Times file photo]
  2. Tampa Bay's Top 100 Workplaces deadline extended to Nov. 17

    Business

    Think you work at one of the best places in Tampa Bay? You've got a little more time to make a pitch.

    Penny Hoarder and Gregory, Sharer & Stuart were among those at an event in Tampa last May honoring winners of the Tampa Bay Times Top Workplaces awards. Nominations are now open for this year.  
[OCTAVIO JONES   |   Times]
  3. Tampa-based Checkers testing delivery, aims for record expansion

    Retail

    TAMPA — Tampa-based Checkers Drive-In Restaurants continues to fly under the radar compared to dominant burger chains like McDonald's and Burger King.

    Checkers Franchisee Shaji Joseph, of Tampa, hoses down the front walkway of his store at 6401 Park Boulevard, Pinellas Park. The business has a new look including signage and exterior tile. One drive through has been eliminated for an outdoor dining area, right. Joseph owns nine Checkers and is planning to open his tenth in Tampa.
[SCOTT KEELER   |   Times ]
  4. City Council approves $5 million for Clearwater Marine Aquarium expansion

    Briefs

    CLEARWATER — The City Council on Thursday approved contributing $5 million to the Clearwater Marine Aquarium for its massive expansion project.

    Clearwater has agreed to contributed $5 million to the Clearwater Marine Aquarium 
's $66 million expansion project.. [ Clearwater Marine Aquarium] 


  5. Trigaux: Florida, Tampa Bay lagging in growth of their startups

    Economic Development

    The annual assessment of how entrepreneurs are doing across the country is out from the Kauffman Foundation — among the best watchers of the nation's startup scene. How do Florida and Tampa Bay fare?

    Lured by financial incentives, startup GeniusCentral relocated from Manatee County in 2015 to St. Petersburg, promising to creatye 40 new jobs. It took downtown space in an appropriately creative workpace for entrepreneurs. It did not last there, later moving back to less expensive space in Manatee. A new Kauffman Index report on entrepreneurship found that Florida is a good place to launch startups but a tougher place to grow them.
[SCOTT KEELER    |      TIMES]