Making Home Affordable Arrives Late to the Accident Scene
The government has launched a new website – MakingHome Affordable.gov – intended to help existing homeowners find out if they are eligible for government help with their mortgage.
The site title – Making Home Affordable – is catchy isn’t it? And so ironic. I’ll explain.
Paths to Borrower Salvation and Enlightenment
Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today’s lower mortgage rates perhaps due to a decrease in the value of their home. A Home Affordable Refinance will help borrowers whose loans are held by Fannie Mae or Freddie Mac refinance into a more affordable mortgage.
Exactly what is the problem being addressed here? The government is flooding the economy with borrowed dollars to drive mortgage interest rates down. Some homeowners – who are making payments on time – can’t refinance because they have no equity. Boo hoo.
Earth-to-government: Most of these people would have been eligible for this program from the very first day they bought their home. No equity. Zero or minimal down payment loans were all the rage. Remember? (Maybe that’s why the teaser language says “perhaps” due to a decrease in the value of their home.)
Where was this “making home affordable” path to enlightenment when Freddie and Fannie were supporting all of these loans?
The second path on the site is “Home Affordable Modification” with a link having this teaser language:
Many homeowners are struggling to make their monthly mortgage payments perhaps because their interest rate has increased or they have less income. A Home Affordable Modification will provide them with mortgage payments they can afford.
When the user clicks to the “am I eligible” page, he/she is asked:
Is your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues, if applicable) more than 31% of your current gross income?
For most folks looking for taxpayer help, the answer likely is “Of course my payment is more than 31% of my gross income. It’s been that way since I applied for the mortgage. So maybe I fudged my income data a little.”
I didn’t see a “I have a liar’s loan” link on the site.
Arriving Late to the Accident Scene
I have to give credit to the Obama administration for its expansive use of web resources to spread information about government rescue and bailout plans.
But I am looking at the bigger picture.
Where were all of these “are you eligible” checks and balances when lenders and borrowers were jumping off the cliff of irresponsibility? Why was the government actually nudging people off that cliff? Were there not any forward-thinking people in any agency of government who saw this coming? If not, have they all been fired?
Improving the Making Home Affordable Site
The government’s Making Home Affordable site needs some upgrades.
I think a “Resources for Responsible Homeowners” tab should be placed on the site navigation bar. On that linked page should be a selection of mea culpas from government officials.
We should also be able to order official “My Home is Still Affordable and I’m Proud of It” t-shirts.
Finally, there should be a tongue-lashing section where the rest of us get to leave comments about how we feel about our tax dollars being used in this way. Everyone who uses the site should have to pass through the tongue-lashing page at least once, then be forced to “click to accept” before proceeding.
I know that it might damage some self-esteem. What’s so bad about that? If they can’t take a little verbal abuse, do they really have the strength to pay a mortgage in tough times?
Image credit: Matthew Winterburn