From an article on FDL about a forthcoming book by Neil Barofsky, the former Special Inspector General of TARP comes this blockbuster of an admission from Tim Geitner: Barofsky mused that Treasury didn’t care about the suffering of borrowers under HAMP (Home Affordable Modification Program), and the issue came up in a meeting with the Treasury Secretary, which was also attended by Elizabeth Warren, then the head of the Congressional Oversight Panel, another TARP watchdog.
Warren asked Geithner repeatedly about HAMP. After several evasions, Geithner said about the banks, “We estimate that they can handle ten million foreclosures, over time… this program will help foam the runway for them.”
Geitner actually said this..out loud! And this confirms one of my suspicions about the banks motives for loan modifications…to ‘soften the crash landing’ (hence the ‘foam the runway’ statement by Geitner).
Extend the time frame for the banks to have to work through the millions of foreclosures, at taxpayer expense, so the banks can “space out the foreclosures and…(have) time to earn their way back to health, mostly through the other parts of the bailout, that enabled them to earn profits”.
As Barofsky says, HAMP was not separate from the bailouts, it was part of them. It squeezed extra payments out of borrowers and then allowed banks to do with them whatever they wanted. It stretched out the foreclosure crisis, by design. In fact, by the end of this, HAMP may not help even the borrowers secure permanent modifications. Not only are the modifications of inferior quality, and not only have they led to high re-default rates already, but most of the permanent modifications are not permanent at all. Barofsky notes in the book that they have five-year time limits, with interest rates rising and payments returning to their original size at that time. So in 2014 and 2015, we’re going to see hundreds of thousands of recasts, like on an adjustable-rate mortgage.
Corporate welfare, designed that way by those at the top, disguised as a program to help the people. Nice.
Thanks for reading my rants…Steve Jackson
Reach me directly at 561.602.1258
