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March 26th, 2009

No Hope in ‘Hope for Homeowners’

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The numbers are in. During its first five months in operation, Hope for Homeowners (H4H) — a program slated to help 400,000 homeowners avoid foreclosure — has officially only helped one. Yes you read that correct, one:

“As it stands now, we’ve only gotten 752 applications,” said Federal Housing Authority spokesman Brian Sullivan. “And only insured one loan. Needless to say, the program isn’t working terribly well.”

Rep. Michael Castle (R – Del.), who sits on the House Financial Services Committee, agreed, calling HOPE “one of the most failed programs we’ve had in a long time.”

Of the $300 billion committed to this program, how much of it has already been spent to help just this one homeowner? Any estimates?

Despite making “improvements” to the program in order reach more homeowners, the U.S. Department of Housing and Urban Development (HUD) was forced to lower their expectations last November since the initial statistics were bleak.

From November 13, 2008:

Unfortunately, so far the program has proven to be a dud — such a disappointment that, according to CNBC’s Diana Olick, HUD took their projection of helping 400,000 homeowners avoid foreclosure in three years off of their press release (dated October 1, 2008). The program which carries a budget of $300 billion will, based on the latest projections, only service 19,000 homeowners in the first year.

To date the Federal Housing Administration has collected 111 applications from lenders to apply for the program — hardly enough to meet the latest expectation of 19,000 in the first year.

In February President Obama announced his own plan to deal with at-risk homeowners. How does Obama’s $75 billion plan — aimed at helping 4-5 million at-risk borrowers — compare to President Bush’s $300 billion plan designed to originally help 400,000 borrowers?

“Obama’s plan is smaller in its approach, with different levels of incentives,” said HSH Vice President Keith Gumbinger. “Hope for Homeowners was so complicated it couldn’t seem to get out of its own way.”

H4H required homeowners to fail in order to take advantage of the program, and participation was completely voluntary on the servicers part. Obama’s Housing Affordability and Stability Plan (HASP) both identifies struggling homeowners before they fail, as well as providing incentives for their services to modify their loans.

“An ounce of prevention is cheaper than a pound of cure,” said Gumbinger.

Whether Obama’s course of action lives up to his expectations, it won’t be hard to exceed the success of H4H.

(hat tip: housingdoom.com)

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One Response to “No Hope in ‘Hope for Homeowners’”

  1. HOPE for Homeowners Prevents 1 Foreclosure Says: March 30th, 2009 at 6:13 pm

    [...] No Hope in ‘Hope for Homeowners’ (hsh.com) [...]

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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