"Hope for Homeowners was sponsored by Rep. Barney Frank (D-MA), the powerful head of the House Financial Services Committee.
'The problem was when we passed it, and it's interesting how things have changed, we were under pressure from the right,' he says. 'Remember, it was the Bush administration. So to get it passed we had to dumb it down, which I regretted, but I thought it was better than nothing.'
Frank says some lawmakers didn't want to spend taxpayer money on what they saw as a bailout for homeowners. So the lawmakers basically tightened the lid on the program. 'The fees were too high. The restrictions on who could enter it were too much,' Frank says.
Critics say homeowners didn't like the program, and most couldn't qualify anyway. There were problems with the way the law dealt with second mortgages such as home equity loans. And, perhaps most importantly, there was also no real money in it for the lenders who were supposed to do the work to refinance the borrowers.
'We cut it back, and then the Senate cut it back even further,' says Frank, adding that the program got cut back so far it just became unworkable."
Comments
Seriously?
Seriously, why does anyone even listen to Barney Frank when it comes to anything financial? It's just plain scary as he's the guy who basically put the taxpayers on the hook for the whole mortgage mess in the first place through his relationship with Fannie Mae/Freddie Mac (brief recap: http://online.wsj.com/article/SB122091796187012529.html) (p.s. I still think the federal reserve is at the root of the problem, but Mr. Frank sure made it worse). Now, he is complaining that he can't use more taxpayer dollars to bail out homeowners who made bad decisions? Amazing.
I don't expect much from NPR (they do great reporting but there's an obvious bias), but claiming that investors support overhauling a homeowner program by quoting Pimco and a guy who invests in mortgage-backed securities is ridiculous as Pimco (one of the biggest, if not the biggest, bond owners/traders in the market) and other mbs investors stand to make millions from such a program (i.e. they all invested in bonds that are now worthless because nobody wants to buy bonds backed by mortgages that might default, or they are now buying bonds for pennies on the dollar as everybody considers them worthless... and by lobbying the government to use money to prevent defaults and restructure mortgages they will drastically increase the values of those bond holdings... more private profit at public costs). Of course they would back a government program that makes them rich... I'll even vote for bailouts if the government just gave me a billion dollars or so (I'll create thousands of green jobs, cross my heart).
Never, ever believe anything Barney Frank says when it comes to anything involving money (as he has a 100% track record of being wrong) and never, ever believe folks who have a ridiculous financial incentive to push a specific plan.