I was lucky enough to get to the Bay Area over the weekend. There’s a Rosemunde that opened in the Mission right after I left which I am missing out.
I stopped by an old local bar haunt and caught up with some old friends. I was reintroduced to someone I met in passing years ago. He asked me if anything interesting has happened lately and I mentioned not much. Talking with him, he briefly mentioned that “the bank is taking pictures of my house”, and when pushed mentioned that work had dried up for a bit in 2009, and he’s fallen behind in his mortgage payments. He was worried because he had a third child on the way and wanted to get things settled with his bank. He said that he was trying to do a mortgage modification with his bank through “the Obama plan”, by which he meant HAMP.
The funny part is that one of the most interesting thing that had happened to me recently was that I was invited to talk with “senior Treasury officials” and “senior Treasury officials” looked me in the eye and explained to me that HAMP was successful program because it was spreading out foreclosures.
Spreading out foreclosures: what does that mean? It means that the friend of a friend with a third kid on the way really thinks that this modification is going to go through, go permanent, and put him on a stable setting to be current with his mortgage; so rather than stop paying his mortgage or negotiating on harder terms he is going to jump through hoop after hoop to try and stay current and then get put on the street when it is optimal for the banks’ balance sheet. That this negotiation is less about finding a real solution and more about the bank positioning him and his family for the right time to take his “shadow inventory” into their stock of foreclosed homes.
And as if on cue, he said that it’s been almost half a year, and the bank was currently asking for forms he had already sent in multiple times before. Cowardly, I wished him good luck. I know the numbers, and know how unlikely it is that he’ll get to some situation that works out for him (or the likely mortgage holder) instead of servicers or second lien holders.
And I felt terrible, because this guy needs a modified form of bankruptcy where he takes a penalty to set the mortgage to the proper market value, he needs the right to rent his home if he can’t afford the mortgage, or he needs some sort of mechanism to allow him to short sell efficiently. He doesn’t need what he’s going through.
The bar where we were chatting has a sticker of Obama on one of the beer taps that’s been there going back to the primary:
In retrospect, the smartest thing I could have done would have been to encourage him to contact David Dayen, whose series on people’s experiences with HAMP continues (parts five six and seven). Or to check out ProPublica’s excellent reporting on this topic, gathered here on this page. (They also have a mechanism to share stories.)