A Conversation Between MANDELMAN and a Reader About New $1 Billion Fund For Unemployed Homeowners

The other day, I posted an article about how a deal had been negotiated in Congress that would make available $1 billion in federal bridge loans for homeowners who, due to unemployment or illness, are unable to make their mortgage payments.  You can find it here: New Legislation to Offer $1 Billion Fund for Unemployed

I came out saying I support the idea, basically because my expectations of what my government is capable of have been reduced to essentially nothing.  Everyone knows how much I love sarcasm… or at least have come to love sarcasm writing about the foreclosure crisis… and on this article I think I might have taken my sarcasm to such a level that readers, especially those that read quickly, may have missed it.

Anyway, I say this because I received an email last night from a reader and our conversation back and forth follows.  I thought it would be worth reading it for numerous reasons… but, it’s of course up to you… Mandelman

THE MANDELMAN MATTERS READER WRITES:

How can an unemployed person taking on even more loans, for what is most likely a well-underwater home mortgage situation, be a good thing?  I still believe the only thing that will work to help resolve this gigantic mess is principal forgiveness, not more loans.  Use a tax on banks, hedge funds, Wall Street firms of all types, to help reduce principal.  Start with those of us who had fully documented income when we got our loans, have lost income due to the negligent (and intentional egregious behavior of various banking types), and help us out with reductions.  I’m surprised that you would think this new program is a good idea (unless I’m reading it wrong).

MANDELMAN RESPONDS:

Well, when you look at it from the perspective of coming from a federal government that has not even come close to doing anything that even gets down the runway, let alone launches…

Bush’s Hope-4-Homeowners plan, which had a $320 billion authorized by American Jobs Creation Act of 2008, ended up modifying one loan and spending essentially nothing.

Obama’s HAMP was authorized at $380 billion and more than a year into it, has spent essentially nothing… $200 million.

Obama’s 2MP program, which was launched 14 months ago, has NOT modified one single solitary second mortgage.

Um, what else… I’m sure there’s more, but I’m tired. When you consider that kind of track record, and the fact that federal employees from two administrations, the entire congress and God knows how many others have been working on this for 3 years… Well, it would seem to me that you either leave the country, eat a gun, or start having some pretty diminished expectations as to the potential for competency that exists.

I mean, it’s like if you were listening to a game of one-on-one being broadcast on the radio, and you were rooting for your player, but he never seemed to be able to hold onto the ball, let alone shoot or score, and then you found out that the guy you were rooting for was playing against Kobe, but was actually a 7 year-old autistic dwarf with Down Syndrome… Well then you clap when he manages to bounce the ball and it doesn’t hit his own foot and rolls out of bounds… Right?

So, with that in mind… A billion in loans for people without jobs, while you allow the market to remain in a freefall with millions of foreclosures ongoing, and at this point nothing even on the drawing board that could potentially stop them… After three years and that many working on the problem…

So… YAY! loans for the unemployed!! YAY! Look, honey, he almost bounced the ball that time. Almost! I know, he hit his toe again, and Kobe got the ball, but the last time he just threw it directly out of bounds, while he shit his pants, slipped on the excrement and fractured his femur… So look how much better this time was!!!

So, YAY!!!’ Loans without jobs!!! That’s the way guys!!! GOOD JOB!!! Assuming they actually do end up making any of the loans that is. If I find out that there’s a requirement attached to the program that says that it only applies to unemployed homeowners with 700 FICO scores and above, and that the bill forgot to consider who the loan originator might be and then they forget to either print or distribute the applications… Well, then that will just be more of the status quo and I’ll have to stop cheering.

AND THE READER REPLIES:

No, it’s another useless program. You’re not applauding a handicapped kid; it’s applause for the Emperor-with-No-Clothes. Its not a kid that can’t do any better; it’s another administration who cant push through a difficult but necessary program.  More loans to underwater homes is simply pushing back the day of reckoning by a few months to a couple years. Another misguided program is worse than doing nothing.

AND MANDELMAN RESPONDS:

Well, of course it’s a useless program, in the sense that it is entirely devoid of thought or potential.  As in, more loans targeted for people without the ability to repay them?  That’s the answer?  Well, if they weren’t going to lose their homes, they certainly will now.  But then, maybe that’s the goal right?  (My sarcasm on this point may have gone too far.  Hey, is it okay if I print our interchange if I leave your comments anonymous?  MA

ONE MORE THING FROM MANDELMAN TO THE READER…

Oh, one more thought… I should add that in some ways, I am quite seriously in favor of the program.  Because our government has proven itself so entirely incompetent, people have taken their own lives and perhaps this program will delay even one person from committing suicide.  It probably won’t stop them from doing it, but maybe because of this program, they’ll do it a year later, and at this point… since this is the best case type of accomplishment I’ve come to expect from the government in this country… then good.

It’s the absolute pinnacle of incompetence… something I’d expect in a novel by George Orwell, or Ray Bradbury… a people conditioned to be happy because at least their government managed to delay one suicide by spending a billion dollars… because the other untold billions they’ve spent or tried to spend, accomplished even less.

And there you have it… ain’t life grand?