The New York
Times has caught on that President Obamaâ€™s $75 billion program
Making Home Affordable, has been widely pronounced a failure. Some
economists and real estate experts are now saying it has done more harm than
Since President Obama announced the program in February, it has lowered
mortgage payments on a trial basis for hundreds of thousands of people but has
largely failed to provide permanent relief. Critics increasingly argue that the
program, Making Home Affordable, has raised false hopes among people who simply
cannot afford their homes.
As a result, desperate homeowners have sent payments to banks in often-futile
efforts to keep their homes, which some see as wasting dollars they could have
saved in preparation for moving to cheaper rental residences. Some borrowers
have seen their credit tarnished while falsely assuming that loan modifications
involved no negative reports to credit agencies.
Some experts argue the program has impeded economic recovery by delaying a
wrenching yet cleansing process through which borrowers give up unaffordable
homes and banks fully reckon with their disastrous bets on real estate, enabling
money to flow more freely through the financial system.
â€œThe choice we appear to be making is trying to modify our way out of this,
which has the effect of lengthening the crisis,â€ said Kevin Katari, managing
member of Watershed Asset Management, a San Francisco-based hedge fund. â€œWe have
simply slowed the foreclosure pipeline, with people staying in houses they are
ultimately not going to be able to afford anyway.
As of early September, only about 1,700 homeowners had finished all the
paperwork and received a new permanent loan. Treasury officials projected Monday
that 375,000 homeowners would hit the deadline to convert to permanent
modifications â€” or fall out of the program â€” by year-end.