Making Home Affordable Arrives Late to the Accident Scene

March 23, 2009 by  
Filed under Economics

cliff_jumpingThe government has launched a new website – MakingHome – 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

Site users have two separate paths to explore. The first path is “Home Affordable Refinancing”.  The link contains the following teaser language:

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

Feed Mr. ToughMoneyLove

FREE UPDATES: If you enjoyed this, please subscribe to receive the newest hard truth from Mr. ToughMoneyLove automatically by RSS feed (what is RSS?) or by spam-free Email.

  • Banner


11 Responses to “Making Home Affordable Arrives Late to the Accident Scene”
  1. Pinyo says:

    One of the thing I realized is that many people don’t know what they are eligible for and even if they do know, they don’t know how. Yes, making home affordable is late, but it’s better late than never type deal.

    I think Obama’s analysts did enough research to know that there are 7-9 millions homeowner who are eligible, but doesn’t know about or know how to take advantage of this assistance. If they can get these folks to take advantage of the help available and contributes to the economic recovery, then great.

    • Pinyo – My point is not so much that the rescue plan is late, but the imposition of loan underwriting standards and due diligence is late. If these borrowers had been properly vetted to begin with, our problems wold be much less severe.

  2. Rick Beagle says:

    I am amazed at how many are opposed to this process. While there may be a portion of the population that simply deserves a “tongue lashing”, many of these people got into this position with the best of intentions. If we can funnel trillions into financial institutions with little to no oversight (their intentions were neither noble nor can they feign ignorance), why do we feel the need to castigate this group of people?

    Nevertheless, I think from a political capital standpoint this was a very smart move, and in the long run will help recover some faith in the real estate markets (though the latter being less important than the former).

  3. MasterPo says:

    TML – Mortgage rates have been very low the last several years. So even if someone bought at the height of the housing bubble they still got a decent rate (say 6-7% or so). While I’m all for saving a buck anywhere you can, just how much better will they get refinancing?? Maybe 5%? 4.75% at best? (presuming no points) So I don’t see the cause of all this (supposed) shock and dismay at people wanting to refinance but aren’t able to. If you can’t afford your house at 7% I just don’t think that 5% is going to make that much of a difference in the course of 30 years.

    Rick – “many of these people got into this position with the best of intentions”. And that’s just it. MAYBE(*) They had good *intentions* of home ownership, just not the practical means/resources to do it. And I’ll be damned if I’m going to back their good intentions!! Who is helping me and my wife?! (answer: No one!)

    (*) and a great many just didn’t think about aaaaalllll that home ownership is; Much much much more than just a mortgage payment. In fact, at times paying the mortgage is nearly secondary. These are probably people who had lived in apartments all their lives and believed owning a house and paying a mortgage was the same as living in an apartment and paying rent. It’s not!

  4. Rick Beagle says:

    Are you familiar with the new bankruptcy laws right (another fine repub congress hall of shame submission)? With over 600,000 jobs being shed every month, in combination with everything else, the ship needed to be pushed a bit from the left just to keep the real estate market somewhat viable. For the most part, the people who will be helped are simply transitioning from one job to the next, but of course those aren’t who are portrayed repeatedly in the media or for that matter on sites like this.

    As for you not wanting to pick up the share for these working families (and for the most part, this is what these folks are), wait until you hear what we are doing with the toxic assets! And not one of these clowns is going to spend a day in jail or for that matter, lose a wink of sleep for the destruction that they have caused. Heck, they are still getting paid bonuses….

    Sorry for the rant….

  5. MasterPo says:


    I’m not going to rehash all the stuff about who should/shouldn’t have been given a mortgage in the first place. That’s been beaten well enough already.

    As for bankruptcy and foreclosure, can’t prove there’s any improvement by me. A close friend and his wife got into VERY deep financial trouble a couple of months ago. So much so they were about to loose their house. The best the bank would do is say go to foreclosure and *maybe* a deal can be discussed in court! Ultimately someone gave them a personal loan that helped them out of the hole.


    2 weeks ago the husband got laid off! The first thing he did was call the bank and tell them (like people are advised all the time on TV these days) to work out some new temporary payment schedule. The bank told him they can’t do anything for at least 3 months!!

    No. Can’t prove there’s any “help” by me and my associates.

  6. MasterPo says:

    TML – Maybe. But you gotta deal with what you have.

  7. cjbr549 says:

    I find the “Making Homes Affordable” title especialy ironic in that the program will prop up home prices that are still historicaly higher than they should be. By stemming the foreclosures that should be happening, at taxpayer expense, the government is messing with the supply side of the supply and demand equation. This will either prop up home prices at current levels for a while or at least slow down the decline, which in effect makes homes less affordable. I don’t think making homes affordable is at all what this program is about. I think the thought is that if these folks that overuse credit are given a new lease on thier credit cards, they will start buying crap again to get the economy started. Unfortuanately, the economy will have to grow at a rate that will outpace the comming inflation in order to do any good. Don’t see that happening.

  8. RC Brooks says:

    You know, something on the who should and should not have been given loans…

    it’s interesting to point out that MOST of the subprime loans are still valid. Says something about our much acclaimed credit rating system, particularly a system that admits as much as a 25% inaccuracy rate.

    There definitely needs to be a way for lenders to determine credit worthiness.

  9. MasterPo says:

    RC – Just because the loans are being repaid on schedule doesn’t make them any less risky, any less sub-prime.

Speak Your Mind

Please leave a comment and tell us your version of the hard truth...

You must be logged in to post a comment.