AMERICA LOST: Treasury’s meetings with bloggers tells a story that I didn’t want to hear.

I talk to a lot of homeowners from all over the country every single day, and it’s been like that for almost two years now.  Each day, I’ve try to do whatever I can to help those struggling to hold on both financially and emotionally.  They reach out to me looking for answers, and I don’t know what else I could do but help in whatever way I can.

I hear a lot of anger, a lot of fear, and a lot of resignation at America lost.  I write about injustice, rant about intolerance, and fight to stop ignorance.  I try to speak out for people that can’t find their voice at the moment.  A friend called me the other day.  When I answered he said, “Still trying to save the world one homeowner at a time?”  We both laughed.

Yes, I suppose I am, I thought to myself.  It’s what I can do… write and try to help where I can.  I started by writing a few articles in the fall of 2007, and I took my act online in December of 2008 when I started blogging on MSNBC’s Newsvine.  In April of 2009, Mandelman Matters was born and since then I’ve worked seven days a week, and so many hours a day that I’d rather not say.  I’ve written 350 in-depth articles on the political, social, economic and legal aspects of the financial and foreclosure crisis since then.

I figure I’ve probably written at least as many articles as anyone in the country on the foreclosure crisis, HAMP, and loan modifications… and it’s quite possible that I’ve written more than anyone else on those subjects.  I don’t sell advertising or make money on my blog, for the last couple of years its been enough that several thousand homeowners have written to me, saying that I’ve made a significant positive difference.

But, it’s not enough anymore.  And I want those that read my column to know why.

It all started this past August 16th and 18th, when the Treasury Department invited some bloggers to come hear what Tim Geithner and other nameless Treasury officials had to say on a range of topics, including the foreclosure crisis and the Home Affordable Modification Program, HAMP.  The first article I wrote about HAMP was on the night of President Obama’s speech introducing his Making Home Affordable plan to save the housing market, which at the time was already in a free fall.  My headline read: “I’m sorry Mr. President.  That’s just not enough.”

I knew right away that HAMP wasn’t going to work as advertised.  There were a lot of reasons why, but the simple truth is I only needed to hear one phrase to know the program would fail: responsible homeowners.

You see, there’s no such thing as irresponsible homeowners and responsible homeowners.  It wasn’t irresponsible sub-prime borrowers that caused this crisis; it was irresponsible Wall Street bankers that did it.  That’s not to say that there weren’t some number of people who bought a home they couldn’t afford, it’s just to say that those people, a tiny fraction of the whole, didn’t have anything to do with the crisis we seem unable to address, let alone solve.

Yet, just about every single week, I end up having to listen to someone tell me about some 24 year-old with a paper route, who bought a $12 million home on the water with a stated income loan.  I’m sure there are a few of those, but they don’t have anything to do with the crisis.

No, borrowers didn’t cause the crisis that the entire world is struggling through today, bankers did that… Wall Street’s bankers to be specific, but lots of other flavors of banker had a hand in it as well.

Millions of people have lost their homes already, and we’ve only just begun to feel the pain that’s sure to come if we stay on our current course.  Why some people don’t see that is beyond me.  But one thing I know for sure, is that the crisis is being allowed to continue because homeowners have no voice in Washington D.C.

Bankers, on the other hand have thousands of lobbyists and hundreds of millions of dollars in campaign cash to hand out.  So, last year, according to Special Inspector General of TARP, Neil Barofsky’s report, we gave the banks $3.7 TRILLION, while spending something way, way under one percent of that amount on stopping the foreclosure crisis.

The people have no voice because they are ashamed.  They think it’s their fault that they are in a difficult financial position today, and when someone is at risk of losing their home to foreclosure, they tell no one.  Should they hire an attorney and somehow save their home from foreclosure, neither they, nor their lawyer tells anyone.  The banks certainly don’t tell anyone anything. And the crisis goes on, worsening every day.  And the media just keeps writing stories about how economists were surprised at how bad things have become.  But, I can’t help but wonder… are they really surprised?  Or did they know all along how bad things would get?

I also can’t help but wonder why everyone’s so quiet about a crisis that’s far worse than any in my lifetime.  In California, for example, when gay marriage didn’t receive enough votes in the last election, there were people marching in the streets.  But millions lose homes to foreclosure, and not a peep.  Banks pay out hundreds of billions in bonuses after being rescued from insolvency by the U.S. taxpayer, and the most you hear is, something akin to “I don’t think I like that” coming from a distant source.

I was able to get through all of this until last week when I learned of what was said at the meetings between various bloggers and Treasury Department officials.  My friend, Richard Zombeck of Huffington Post and shamethebanks.org told me about the meetings and sent me a link so I could see for myself what went on.  Then others sent me links to what others had written about what was said during the meetings.  And that was it for me… I stopped writing… for about a week, and maybe a little longer.  What was the point, was all I could say to myself.

It made me sad to know what Treasury Department officials had said about the foreclosure crisis and HAMP… very, very sad.  In fact, I can’t think of another time in history when my government acted as these guys have acted, or are continuing to act today.  They truly do not care about people at all.  They are so shockingly devoid of compassion or empathy that they offend me so deeply that I don’t like thinking of this government as representing my country or I can’t help but feel that my country is lost.

Treasury Department officials said, in no uncertain terms that they knew HAMP wouldn’t save homeowners from foreclosure.  Here’s what was written in Huffington Post’s Shahien Nasiripour’s detailed article on the meeting

The administration knew they’d only reach a fraction of those needing help, the official claimed, and that millions of homeowners would ultimately lose their homes to foreclosures that the administration chose not to prevent. Taxpayer money was on the line, and the administration couldn’t justify spending the amount of money it thought would be necessary to save those homes, the official said.

Nevertheless, HAMP remains the best option — even though it’s reaching fewer borrowers than forecast. Other programs, the official noted, would have been either too expensive or unfair. Homeowners who consciously bought more homes than they could afford shouldn’t be bailed out.

Here’s what Steve Waldman of Interfluidity.com had to say about the meetings:

Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least.

There were murmurs among the bloggers of “extend and pretend”, but I don’t think that’s quite right. This was extend-and-don’t-even-bother-to-pretend. The program was successful in the sense that it kept the patient alive until it had begun to heal.  And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks.

Policymakers openly judged HAMP to be a qualified success because it helped banks muddle through what might have been a fatal shock. I believe these policymakers conflate, in full sincerity, incumbent financial institutions with “the system”, “the economy”, and “ordinary Americans”.

Treasury officials are not cruel people. I’m sure they would have preferred if the program had worked out better for homeowners as well.  But they have larger concerns, and from their perspective, HAMP has helped to address those.

This led to blogger Atrios of Eschatonblog.com to write the following:

Conning homeowners by announcing a government program designed to help them when in fact it was designed to help the banksters is, in my world, “cruel.”

Felix Salmon, blogging on Reuters, said the following:

HAMP is now coming into focus as a serious failure and cruel one at that.  The problem is that it’s not helping people stay in homes, but merely delays foreclosures. This helped banks weather a foreclosure crush, but raised false hopes among a substantial number of applicants, hundreds of thousands of whom were disqualified, as Felix points out, even though they made their payments on time.

HAMP might well have been a success in the ways that Treasury enumerates — helping out banks on the solvency front, reducing the rate of foreclosures, that sort of thing. It was almost certainly a good idea politically, as well: you don’t hear much about the plight of homeowners being foreclosed upon, these days, certainly compared to the huge amount of noise on the subject around the time that Obama was elected president. The government is perceived to have Done Something, and the circus has moved on.

But it’s still a tragedy that hundreds of thousands of people who signed up for loan modifications — and who made all of their modified loan payments in full and on time — have had their modifications cancelled. Many of those people blame the servicers; Treasury, meanwhile, is more prone to blaming the borrowers themselves, claiming they’re incapable of verifying their income.

My feeling is that even if income hasn’t been verified, servicers shouldn’t simply cancel the loan mods if they’re performing well. And that if that’s what the servicers are doing, the incentives within HAMP have been designed very badly. That’s a Treasury failure, and it’s impossible to credibly spin it as any kind of success.

And, incredibly, they are sticking by HAMP.  Only now Treasury is saying that the benefit is found in spacing out foreclosures, as opposed to stopping unnecessary foreclosures.  Tens of billions to spread out foreclosures in order to help banks take losses… on the backs of ordinary people… American citizens… taxpayers.  Because I suppose the $3.7 TRILLION we gave the banks in 2009 alone wasn’t enough.

Here’s Huffington Post Nasipour once again:

The official touted the ever-growing pipeline of homes likely to enter foreclosure as a success in the administration’s fight to stem the rising tide of home foreclosures. It’s taking longer for homes to enter foreclosure, and it’s taking longer to evict homeowners once they enter foreclosure.

The so-called “shadow inventory” of homes — those with severely delinquent mortgages, in foreclosure or already repossessed that have not yet been put on the market — has significantly grown since the administration took office and is estimated to range from 5 to 7 million homes.  Through June, borrowers in foreclosure have been delinquent for an average of 461 days before being evicted from their homes, according to Jacksonville, Fla.-based data provider Lender Processing Services.

That’s a good thing, the official said, because it gives the market time to absorb these homes gradually — without leading to a dramatic drop in home prices.

Richard Zombeck, writing for Huffington Post and shamethebanks.org, among many other things said the following:  (And I strongly suggest you read Richard’s entire article, click his name and it will take you to it.)

When President Obama delivered his speech in Arizona in February, 2009, nowhere in the speech did he come close to implying that this plan was intended to help the banks and servicers get more money out of homeowners before taking their homes. What he said was, “This will enable as many as three to four million homeowners to modify the terms of their mortgages to avoid foreclosure.” It wasn’t followed by, “…for a couple of months.”

Richard also included this paragraph, also from Nasipour’s article, describing it as “one of the more egregious statements to come out of this discussion”.

One of the reasons why HAMP has been effective ties back to the foreclosure pipeline. The official said that because some 1.2 million homeowners entered the program and immediately benefited from a trial period of lower monthly payments, not only were their foreclosures delayed but they also received what was essentially a tax cut of more than $500 a month — all without cost to the taxpayer, the official boasted. Even though nearly half of those borrowers have been booted from the program, they still benefited from lower monthly payments courtesy of the Treasury Department with the cost borne by lenders and investors of those mortgages. Plus, at the very least, those homeowners got a chance at a permanent modification, the official said.

And finally, Dean Starkman wrote:

“So, a debate over a complicated matter is sharpened, for me, anyway.  Not to overstate anything: the world didn’t change because of the meetings.  There’s no evidence the bloggers—via the meeting or their blogs—had any influence whatever, for instance, on HAMP policy.”

Oh, well good then.

So, before I say anything about all of that, there are a few facts I pulled from various sources that I want to lay before you.

1. President Obama appointed Timothy Geithner to be Treasury Secretary. As president of the Federal Reserve Bank of New York, Geithner served under a board of directors headed by JP Morgan Chase CEO Jamie Dimon.  Geithner had been partly responsible for the decision to let Lehman Brothers go under, for the tarp program, and for American International Group (AIG) paying its creditors with taxpayer money.  As his chief of staff, Geithner chose a former lobbyist for Goldman Sachs.

2. President Obama: “The recession was caused by a perfect storm of irresponsibility and poor decision-making that stretched from Wall Street to Washington to Main Street.”

3. On February 10, 2010 Obama said that he didn’t “begrudge” the $17 million bonus awarded to Dimon and the $9 million to Goldman Sachs CEO Lloyd Blankfein. “I know both guys. They are very savvy businessmen.”

4. A group within the White House that began calling themselves the “pitchfork gang,” said their attempts to persuade Obama take a tougher stance on Wall Street were undermined by Geithner and by National Economic Council head Larry Summers.  Geithner and Summers were apparently worried about upsetting business confidence.

5. In the stimulus’s first year, the administration spent only $17 billion of the $139 billion allocated for infrastructure spending.

6. Geithner and Summers repeatedly blocked attempts to get tough on Wall Street on the grounds that doing so would threaten the recovery itself by upsetting the bankers.

7. Organizing for America, the administration’s campaign organization, which is supposed to be focusing on the 2010 elections, recently devoted its resources to organizing parties across the country to celebrate Obama’s forty-ninth birthday.

Sorry, but I’m about done with the Oblabla Administration.  Waiter, check please.

Look, I’m not making a political statement.  I don’t see the Republicans doing anything to help the situation either.  I fact, to the contrary, the Republicans have offered nothing constructive since Obama took office in 2009.  They vote as a block as if they were elected to represent a party as opposed to individual constituents, and personally, I think if they’re going to vote like that, I think they should have to wear matching sweaters and sing their chorus of “Nooooooo” in harmony.

Just on one day I’d like to see Obama come out in favor of cream in coffee, just so I could watch some knucklehead Republican oppose it on Face the Nation.  “No, I say there should not be cream in coffee.”  Oh, sit back down you intellectual midget.

None of that excuses what the Obama Administration has allowed to happen as related to the foreclosure crisis.  Treasury officials now say they knew and it was okay with them.  In fact, it was a good thing.

Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole.

No, I’m sorry but no, damn it.  I don’t even know what a palliative is, but it doesn’t matter.  Geithner, you elitist piece of garbage, you do not get to torture American citizens because you find benefit for the banks in doing so.  Who the hell do you think you are?  Did my president know about this?  Because you imply that he did, and if that’s the case then he should be impeached.  No American president would ever condone what you are describing and if this one did, he is not fit to lead our country.

Mr. Geithner… people have taken their own lives over what you’ve allowed to happen.  Children have gone to bed night after night scared to death, not knowing why their parents are so afraid… or so angry.  Marriages have ended.  Fathers have sat up at night wondering if their life insurance policies will pay off after suicide.  And all of this and more continues to this day and yet there is no plan to change a thing.  Because you’re happy that Wells Fargo is suffering too terribly much.

And why?  Because Citibank or Bank of America would have gone under if the foreclosures would have come at a faster pace?  Bullshit.  You think that it’s because of HAMP that it’s taking banks a long time to foreclose?  You’re a moron, Tim.

If banks were going to go under by foreclosing too quickly they would have slowed the pace themselves.  We didn’t need you to invent a fake loan modification program and lie to the American people about it in order to slow down the pace of foreclosures.  Besides they could have MODIFIED THE LOANS, Timmy.  There was always that alternative, lest you forget.

Before you showed up with HAMP banks were modifying loans much more frequently.  Is that what you wanted to do, STOP MODIFICATIONS?  So you invented a program that would do just that by promising to modify 3-4 million loans?  Did Obama know of your plan?  Did the President of the United States know that this outcome would be considered a success?  Is that what your cohorts at Treasury are saying… off the record, of course.  Cowards.

Mr. Geithner, you should be incarcerated for the rape of the American people.  You know what caused this crisis and you know damn well that it wasn’t some guy in Stockton, California not making a mortgage payment.  How do you sleep?  Do you even know what you’ve done to thousands of people’s lives so the banks wouldn’t have to foreclose too quickly?  If that made sense to you, you need help.

To my readers…

That’s it.  I can’t do it the same way I have been for the last two years.  The rules of the game have changed.  I suppose I could give up and walk away, but I won’t do that now no matter what.  This is a whole new ball game and we need to be much more aggressive, much louder, much more intolerant of the abuse by financial institutions.  We need the consumer attorneys to file more lawsuits, and we homeowners have to save our money to pay for them to do so.  We can’t sit back and watch 14 million more homeowners lose their homes to foreclosure, because if that’s the way it goes, then our country truly will be lost for decades… perhaps forever.

Do you feel what it’s like out there?  Not where Tim Geithner lives, but where you and I live.  Imagine what it will feel like a year from now, when it’s that much worse.  And then two years from now when it’s worse still.  And then worse still.  What will we all say then?  What will we tell our children about the country we have left for them?

Gee, it really was our fault.  We all took an irresponsibility pill in 2005 and went out and bought homes we couldn’t afford and that’s why your world looks like this?  Sorry about that?.

We gave the banks $3.7 TRILLION last year alone.  That’s $3.7 TRILLION.  And Goldman Sachs alone handed out $120 BILLION in bonuses last year?  We bailed out GMAC three times to the tune of almost $20 billion?  GMAC?  Why, were they too big to fail, too?  GM itself went bankrupt, that was okay… but GMAC was too big to fail?  Really?  Really?

Is someone going to make an argument as to why it made sense to hand $3.7 TRILLION to bankers who ran their banks into the ground while doing essentially NOTHING for millions of homeowners whose foreclosures only caused their neighbors to sink further underwater.

We need to do things differently.

I know that some people need to get their loans modified, so for those that do, use the REST Report and push like hell.  I see loans get modified every single day.  And there are a lot of dedicated people out there helping homeowners every day.  Oh, I know…  guess who wants you to believe they’re all scammers… that you don’t need a lawyer… that you should just call your bank directly.  Others may want to strategically default, and for those folks, let’s see just how long we can keep people in homes without paying for them.  And if you can afford to file a legitimate lawsuit, for God’s sake file it.  And I’ll help anyone who asks me to in any way I can.  I’ll organize more attorneys so they’re better prepared to represent homeowners.  I’ll help educate more people so they know that it’s not their fault, so that they can find their voice once again.

But this is going to take more than passion.  It’s going to take money…

From the very beginning of my journey into this crisis, I’ve wanted to produce documentary style programming… broadcast quality video… footage of homeowners telling their stories, sharing the horror of their experiences dealing with banks that don’t care about anything this country has given them.  Interviews with real people that didn’t do anything wrong or irresponsible in order to find themselves at risk of losing their homes.  And I’ve collected such interview footage over the last two years… and it’s powerful… like, kick you in the gut type powerful.

I wanted to produce such a documentary and have it delivered to every member of congress and every member of the senate… every state governor’s desk and every major media outlet… I wanted to see it on television and on YouTube… I wanted it delivered to the White House… and all on the same day.  I called the initiative, A Hundred Thousand Homeowners, and the idea was to get 100,000 people to each kick in a dollar.  After PayPal, it would produce a budget of $67,000, and with that money we’d get our message heard.

But it’s taking far too long.  The problem is that it doesn’t spread.  Someone sends in their dollar, but that’s where it stops.  They don’t tell anyone else, because they don’t want anyone else to know of their situation.

Two weeks ago, I was interviewing a homeowner who had struggled for 14 months to get his loan modified.  He finally did in a few short weeks after sending in a REST Report, so I wanted to hear his story.  I interviewed him on camera for 20 minutes and it was emotional.  He had a tear in his eye through most of the interview.  It was hell for him, and everyone there could feel his pain.  At the end I asked him if he had anyone to talk to through the experience and he explained that he didn’t.  Not the sort of thing you talk about, he explained.

Then I asked him if his wife had anyone to talk to through the nightmarish process of getting his loan modified, and he looked down at the floor and then back at me.  He said: “I never told her.”

Through 14 months of being put through hell by his bank, through 13 SCHEDULED SALE DATES THAT WERE EACH POSTPONED AT THE LAST MINUTE… and he never told his wife until it was over and his got his modification.  And that said everything to me.

So, here’s the deal.  We need to do more.  And I will do more.  It’s all a question of how fast we can move.  Last week I was invited to Washington D.C. to speak at a rally, and I said I probably couldn’t make it because I wouldn’t be able to afford it.  I’m sure it will go just fine without me, there are lots of others who can deliver the message, but the thing is… I really don’t believe that.  I think I’m uniquely positioned and prepared to deliver the message for homeowners.  I think I  would make a difference if I could be there.

I also know that I could produce documentary programming that would change minds… shatter paradigms… and force politicians to take action.  I’ve been successful in print.  I’ve written 350 articles on this topic… and readers say they’ve made a difference.  This is still our country.  It’s still a democracy.  Let’s not fail our children because we failed to act.

I’ll be putting a new tab on Mandelman Matters in the next few days.  It will be labeled “MY MISSION” and it will describe in greater detail what I want to do… what I will do… and it will ask for your support.  And if it comes, then we’ll move quickly, and if it doesn’t, it will take longer.  But I’m going to do it one way or the other.  Because I know now that I have no choice.  Treasury’s officials have made that much all too clear.

I’ve spoken with others around the country and they will come along… but we have to start somewhere.  We have to show that we can make our voices heard.

If you’re a business owner, consider supporting the effort by sending in a substantial donation and I’ll make sure your company is recognized and promoted online to thousands of people.  If you’re an individual homeowner, do what you can.  If you can’t send money, perhaps you can help in other ways.  Organizing meetings of homeowners, sending out emails, posting links to your Facebook page, calling your representatives and encouraging others to do the same.  There’s a role for everyone in this fight, and we’ll need all the help we can get.

And if you don’t want to be a part of this drive for American homeowners… write in and tell me I should quit… that it’s a waste of time… that we cannot win… that we won’t even be heard.

I won’t listen, of course, but I want to know how you feel one way or the other.  For God’s sake do something… even if it’s writing me an email telling me I’m nuts.  At least I’ll know you’re alive.

350 articles.  A lot to read… let alone to write.  I’ve gotten to know hundreds of lawyers around the country that are fighting for the rights of homeowners.  I’ve spoken with and helped thousands of homeowners and heard their stories first hand.  I’ve built alliances with others on-line.  ML-Implode will help.  Shamethebanks.org will help.  Danny Schechter, the producer/director of the documentary, Plunder, will help.  Steve Dibert of MFI-Miami will help.  Short Sale Power Hour will help.  ThinkBigWorkSmall will help.  And I know lots of others that will help too.

Let’s start somewhere.  Help me and I’ll fire the first shot.  After all, how do you eat an elephant?  Simple.  One bite at a time.

Mandelman out.


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