We research, you save.
Got Questions On Rates? (855) 610-2972
January 25th, 2011

Should the government stop trying to prevent foreclosures?



Capital BuildingAt least one congressman thinks so, and said as much yesterday:

A top Republican on the House Financial Services Committee said Monday that the government should abandon its efforts to save homeowners from foreclosure.

Rep. Randy Neugebauer (R-Texas), the chair of the committee’s Oversight Subcommittee, told housing experts that government attempts to prevent foreclosures is prolonging the inevitable for many struggling homeowners and impeding the private market.

“All these foreclosure mitigation initiatives we’re taking need to stop,” he said, speaking at an event co-hosted by the University of Maryland’s Robert H. Smith School of Business and the NYU Stern School of Business.

To be fair, I have certainly been quite critical of the federal efforts taken to help homeowners avoid foreclosure. In my opinion, the programs and initiatives have largely been ineffective and have failed to live up to their goals. Our readers express frustrations day in and day out about how misleading efforts like HAMP appear.

Our latest comment from reader Sherry is unfortunately a frustration we have heard many times before:

It has taken nearly a year for our HAMP application to get through our lender… We have had to provide the same paperwork every 60 days. Finally, a week ago we were told that we were denied. We have asked for an explanation as to why and we were told that they do not have to give us one, but that we can reapply. How do consumers know if their loans are really being considered or are we just being shuffled through the system time and time again?

Do I think overall that HAMP and HARP have failed at what they set out to do? Yes. Should they disappear entirely overnight? No. It’s hard to tell homeowners like Sherry that these efforts are no longer available. Despite a lot of negative reactions we get from readers, there have been a few stories of success.

Readers: What do you think? Should government efforts like HAMP be terminated before they’re slated to end? Should these efforts and funding be directed towards some other form of assistance? Do you agree with Neugebauer when he says “We’ve got to get the government out of the way here … [and] let the market do what it needs to do”?

(hat tip: The Wonk Room)

7 Responses to “Should the government stop trying to prevent foreclosures?”

  1. Tweets that mention Should the government stop trying to prevent foreclosures? | HSH Financial News Blog -- Topsy.com Says: January 25th, 2011 at 5:56 pm

    […] This post was mentioned on Twitter by HSH Associates, Cheryl Hubbard. Cheryl Hubbard said: Should the government stop trying to prevent foreclosures?: To be fair, I have certainly been quite critical of … http://bit.ly/fjWy4Z […]

  2. Mitch Mitchell Says: January 25th, 2011 at 9:43 pm

    I personally think the representative must be being paid by someone and should be relieved of his duties. It’s the government’s job to try to protect its citizens, and if this guy’s not up to the job then he should just pack up his bags and leave. If not the government, then who does he believe should be helping to uncover all the illegalities that have been occurring? Such idiocy.

  3. Liz Says: January 26th, 2011 at 5:39 pm

    It is a tricky question. I have had many people say that all of the bad loans need to get flushed out as quickly as possible to have a fresh start. I only wish someone had a crystal ball.

  4. George E. Bourguignon, Jr. Says: January 27th, 2011 at 11:01 pm

    This is a very tough question to answer, and unfortunetely, I don’t think that there are many wrong answers. Like the other comment stated, no one has a crystal ball.

  5. Tim Manni Says: January 28th, 2011 at 1:24 pm

    Hey Mitch, Sorry it took me so long to get back to you. I agree: “It’s the government’s job to try to protect its citizens”, but you also have to consider where he’s coming from in terms of cost and effectiveness. That said, I tend to think of just certain programs like HAMP, not overall picture. I do agree with you, I believe it’s the govt’s responsibility to be investigating illegal foreclosures. Thanks for commenting, Tim

  6. Tim Manni Says: January 28th, 2011 at 1:39 pm

    Hey Liz, It’s a tough call. You’re right though, the problem with so many of these foreclosure-prevention efforts is that they seem to be targeting a lot of borrowers who, despite receiving assistance, still manage to fall behind on their payments or eventually foreclose. thanks for your comment, Tim

  7. Center for Financial Policy Blog » CFP In the News Says: February 4th, 2011 at 1:10 pm

    […] Should the government stop trying to prevent foreclosures? […]

Leave a Comment

Receive Updates via Email

Delivered by FeedBurner

About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

Our bloggers:

Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

Connect With Us

  • rss feed icon
  • facebook icon
  • twitter icon

Compare Lowest Mortgage Rates