In the Washington Post this morning, Dana Milbank tells of his woes refinancing his mortgage:
Last fall, my wife and I refinanced our mortgage with Citibank. Sixty days later, we received a "cancellation notice" from our homeowners insurance company "for non-payment of premium."
Turns out Citibank, which had been collecting hundreds of dollars a month from us to pay the insurer, hadn't made the payments. It was, I later learned, one of the usual tricks mortgage servicers use to squeeze more cash out of their customers. About a month later, I learned of another trick: Citibank informed us that it was increasing our monthly payment by nearly $300.
Along the way, a simple refi became a months-long odyssey: rates misquoted, interest charged on a phantom account, legal documents issued in wrong names, a mortgage officer who disappeared for days at a time (first it was his birthday, then his laptop was in the shop), a bounced check from Citibank's own title company, and the freezing of our bank accounts.
Truth be told, I'm sorry for Milbank. I had some family members go through a wrenching and unnecessarily difficult situation involving their attempt to purchase a short sale, and the banks involved messed things up every step of the way. If Milbank is arguing that the banking and mortgage industries need to be more accountable, transparent and consumer-friendly -- there's hardly an American that would disagree with him.
But then Milbank pivots and, incredibly, uses the well-known problems in the mortgage industry to defend the deservedly-maligned Housing Affordable Modification Program (HAMP):
It's a bad situation - and the new majority in the House is poised to make it even worse.
Republicans are aiming to repeal the Home Affordable Modification Program, the Obama administration's main response to the foreclosure crisis. The program, by all accounts, has been disappointing, helping only about 600,000 homeowners of the 3 million to 4 million projected. But its failure, watchdog groups say, was caused by the mortgage servicers' ineptitude - lost paperwork, bad accounting and the like - and lack of concern about whether the mortgages they service (but don't own) go into default. Rather than crack down on the banks, the House Republicans would kill the one program that, at least in theory, gives borrowers some chance of avoiding foreclosure.
"If you take that away, you've got nothing," says Julia Gordon, senior policy counsel at the Center for Responsible Lending. "The servicers can just do whatever they want."
Any excuse to bash Republicans, I guess. But on the merits this is pure nonsense. After all, here's how Neil Barofsky, the Obama administration's Inspector General for TARP, described the program:
The American people are essentially being asked to shoulder an additional $50 billion of national debt without being told, more than 16 months after the program’s announcement, how many people Treasury hopes to actually help stay in their homes as a result of these expenditures, how many people are intended to be helped through other subprograms, and how the program is performing against those expectations and goals. Without such clearly defined standards, positive comments regarding the progress or success of HAMP are simply not credible, and the growing public suspicion that the program is an outright failure will continue to spread.
Even David Dayen of the liberal Firedoglake isn't buying this idea that HAMP is helping out consumers:
Now, I don’t totally agree with one of his premises, that House Republicans are about to make this worse by attempting to repeal HAMP. In fact, these routine stories of servicer abuse happen inside HAMP every day, because of a program that is entirely discretionary and a Treasury Department that has to this day offered no sanctions for abusive servicer conduct or violations of program guidelines. Milbank recognizes this but can’t tear himself away from the position of many consumer advocates, that HAMP is bad but better than nothing. This relies on a pipe dream that you could actually fix HAMP and make it work for consumers; I think we’re beyond that stage.