A couple of interesting bailout-related items crossed my desk
today. I have given up on trying to keep track of all the
bailouts, but these both relate directly to our beloved topic of shadow
inventory so I thought I’d note them.
First, the White House is trying to ban any foreclosure unless the loan in question has been screened for
HAMP, the government’s flavor-of-the-month home loan modification
program. As I understand it, HAMP has been fairly useless, for
reasons I will describe below. But no matter — an extra
mandatory step to screen every mortgage for eligibility will further
delay the foreclosure process, perhaps resulting in even more delinquent mortgages remaining in pre-foreclosure limbo.
The reason that HAMP and the government’s other varied foreclosure
prevention schemes haven’t made much of a splash is that they don’t
address the main cause of foreclosures: that many homeowners owe more
than their homes are worth.