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snapple candy · 09-10-2009, 08:50 AM

I am not so good and doing the link thing but this it. I have posted an excerpt.

On "Progress of the Making Home Affordable Program: What Are the Outcomes for Homeowners and What Are the Obstacles to Success?"

Testimony

of
Mark A. Calabria,
Director, Financial Regulation Studies, Cato Institute
before the
Subcommittee on Housing and Community Opportunity
Financial Services Committee
United States House of Representatives
On "Progress of the Making Home Affordable Program: What Are the Outcomes for Homeowners and What Are the Obstacles to Success?"

My testimony today will address two specific questions. The first is: why have the Obama and Bush Administration efforts, along with those of the mortgage industry, to reduce foreclosures had so little impact on the overall foreclosure numbers?
The second question is: given what we know about why previous efforts have had such little impact, what are our policy options?

Why haven't previous efforts stemmed the foreclosure tide?
The short answer to why previous federal efforts to stem the current tide of foreclosures have largely failed is that such efforts have grossly misdiagnosed the causes of mortgage defaults. An implicit assumption behind former Treasury Secretary Paulson's HOPE NOW, FDIC Chair Sheila Bair's IndyMac model, and the Obama Administration's current foreclosure efforts is that the current wave of foreclosures is almost exclusively the result of predatory lending practices and "exploding" adjustable rate mortgages, where large payment shocks upon the rate re-set cause mortgage payment to become "unaffordable."
The simple truth is that the vast majority of mortgage defaults are being driven by the same factors that have always driven mortgage defaults: generally a negative equity position on the part of the homeowner coupled with a life event that results in a substantial shock to their income, most often a job loss or reduction in earnings. Until both of these components, negative equity and a negative income shock are addressed, foreclosures will remain at highly elevated levels.
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09-10-2009, 08:50 AM	#9 (permalink)
snapple candy Senior Member Join Date: Feb 2009 Posts: 1,777 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: Interesting website I am not so good and doing the link thing but this it. I have posted an excerpt. On "Progress of the Making Home Affordable Program: What Are the Outcomes for Homeowners and What Are the Obstacles to Success?" Testimony of Mark A. Calabria, Director, Financial Regulation Studies, Cato Institute before the Subcommittee on Housing and Community Opportunity Financial Services Committee United States House of Representatives On "Progress of the Making Home Affordable Program: What Are the Outcomes for Homeowners and What Are the Obstacles to Success?" My testimony today will address two specific questions. The first is: why have the Obama and Bush Administration efforts, along with those of the mortgage industry, to reduce foreclosures had so little impact on the overall foreclosure numbers? The second question is: given what we know about why previous efforts have had such little impact, what are our policy options? Why haven't previous efforts stemmed the foreclosure tide? The short answer to why previous federal efforts to stem the current tide of foreclosures have largely failed is that such efforts have grossly misdiagnosed the causes of mortgage defaults. An implicit assumption behind former Treasury Secretary Paulson's HOPE NOW, FDIC Chair Sheila Bair's IndyMac model, and the Obama Administration's current foreclosure efforts is that the current wave of foreclosures is almost exclusively the result of predatory lending practices and "exploding" adjustable rate mortgages, where large payment shocks upon the rate re-set cause mortgage payment to become "unaffordable." The simple truth is that the vast majority of mortgage defaults are being driven by the same factors that have always driven mortgage defaults: generally a negative equity position on the part of the homeowner coupled with a life event that results in a substantial shock to their income, most often a job loss or reduction in earnings. Until both of these components, negative equity and a negative income shock are addressed, foreclosures will remain at highly elevated levels. .