I heard a great interview on NPR radio yesterday. It was with another financial blogger with some common sense, Barry Ritholtz. Barry also recently released the book Bailout Nation, where he offers one of the clearest looks at the financial lenders, regulators, and politicians responsible for the financial crisis of 2008. In the interview, Ritholtz talks about the government sponsored loan modification programs, essentially calling them out for doing very little to help the homeowner, and an awful lot to help the banks. (Seems like we’ve heard that somewhere before… hmmmm)

You can read and listen to the full interview here

The main point of the interview, it that by artificially propping up real estate prices, you’re hurting the economy as a whole, and even if by doing so you do help the people who either bought more home than they could afford or the people with equity in their homes who would be hurt by dropping real estate prices, at the end of the day you’re ignoring the real problem – namely that the “equity” that was created during the housing boom was largely fictional anyway. With that in mind, the only way to truly fix this problem is to let housing prices get back normal, and that will only happen through defaults, principal reductions and short sales.

By promoting all these loan modification programs the government is basically allowing the banks to do whatever they want at the homeowner and taxpayer’s expense. Even those who get modifications will many times default anyway, either due to the fact that their homes are still grossly underwater in most cases, or due to the fact that they can’t make the new payment because of a change of financial situation. Whatever the case, we can say for certain that so far any government sponsored loan modification programs have been very expensive and have far undelivered given the results promised. Unfortunately, it seems that since our government refuses to listen to the lessons of the past, we’re going to be doomed to repeat them. As Mr. Ritholtz so plainly put it…

“There are a lot more effective ways to spend $14 billion than essentially rewarding the banks that were just so reckless and irresponsible. It just doesn’t make any sense.”

Amen Barry.

Jon Maddux



Jon D. Maddux is the former CEO of YouWalkAway.com. Although there has been a bit of controversy with the company name, the entrepreneur passionately believed that homeowners across America would desperately need foreclosure advice and so he came up with the Walk Away foreclosure help website. Having over 11 years of real estate and finance experience, Maddux realized with the burgeoning credit crisis, many homeowners in adjustable rate mortgages and high LTV loans were unaware of what they were about to face. With that understanding, Maddux developed an affordable business model that allowed homeowners to know their rights and use the law to their advantage. Beyond the monthly foreclosure monitoring service and cease and desist letters, You Walk Away provides attorney consultation in each state and CPA consultations. Homeowners are armed with the knowledge and peace of mind they need to go through possibly the toughest experience of their lives.

Since January 2008, You Walk Away, LLC has helped over 8000 customers navigate through the hardship of foreclosure and / or a short sale. You Walk Away has been featured in news publications and TV programs such as: ABC Nightline, CNN,Yahoo Finance, Time Magazine, The Wall Street Journal, front page of The New York Times, Bloomberg, Forbes, Fortune,Money Magazine, NPR, AP, NBC, CBS and Fox News among many others. Many of these publications have used quotes from Maddux about foreclosure, short sales and mortgages as well as obtaining a mortgage after foreclosure or short sale.

More recently Jon has launched http://www.afterforeclosure.com, a free website that helps people find out if they are eligible for a new mortgage after foreclosure or short sale. There are free resources available on the site to help consumers get back into homeownership. At http://www.afterforeclosure.com and now https://www.loansafe.org, Maddux writes about foreclosure, short sales and getting new financing after foreclosure or short sale. Jon specializes in hard to get Jumbo mortgages after foreclosure and short sale. As you can imagine, with helping thousands of customers go through this process, there is special insight and first-hand knowledge that he gets and is able to share with his readers. Jon Maddux is a licensed mortgage professional focusing on helping people that have gone through foreclosure or short sale buy again with better market timing.