Obama Program 'A Bust' — Will 2 Million More Homes Be Taken in 2010?

Holiday season has brought no relenting of the massive wave of foreclosures drowning American homeowners; and President Obama's much-hyped "HAMP" program to save homes has proven an embarrassing failure. This year's 4 million foreclosure filings will spawn an unprecedented 1.7 million or more home seizures in 2010, according to First American CoreLogic's latest projection. Even in the past two dreadful years, the number of home repossessions has not been above 1.3 million/year; another escalation in home losses would be catastrophic.

That's one of the adjectives which advocates for debt-strapped homeowners are using to describe Obama's "Home Affordable Mortgage Modification Program" (HAMP). The San Francisco Chronicle, in a long article today, reports surveying housing advocate organizations about the Obama plan which was unveiled on Feb. 17 of this year. "At year end, the plan is widely considered a bust," concludes the newspaper. Just 31,382 borrowers in the nation had received permanent modifications of their mortgage loans (reducing the monthly payments to 31% of their total household income) as of Nov. 30 (leaving aside the fact that many who do get modifications, default on their loans again due to unemployment and cuts in household income in the past two years). "'HAMP is turning out to be something of a disaster,'" an attorney at Housing †Economic Rights Advocates in Oakland told the Chronicle). [pbg]

In addition, overall U.S. November housing reports showed that what housing sales activity there is, is largely dependent on government tax subsidies, and foreclosure sales. Existing home sales rose 7.1% from November 2008's super-depressed level, because this measure counts sale closings, which were being rushed through that month to beat what was thought to be the end of the tax subsidy (actually it was extended); and it is dominated by foreclosure sales.

But new home sales, which counts contracts signed — in November, those contracts appeared to be too late for the subsidy — fell by 11.3% month-to-month, 9% year-to-year. Even the five-month average fell from an already super-low 404,000 to 395,000 annual rate. Only 349,000 new homes sold in 2009 through November, 24% down from depressed 2008. Homebuilders' inventories and construction rates of new homes are at record lows.