Barack Obama, University of Nairobi, August 28, 2006
An Honest Government, A Hopeful Future

Now, 11 years later, with 11 years of payments and the downpayment put into the house, they can't make the payments. Both lost their jobs and can't find new ones, except for a part time job at CostCo. They're moving to a small apartment and can't have their dog and three cats. Losing the house hurts; the pain is compounded by losing the pets (maybe they can sneak one cat in...).

They were hoping to sell their house to avoid foreclosure.

So, I thought about them, and I fear for their chances of getting it sold. Our damnable modern Dems! Not there when people really need them to do something effective.

My second thought was that as I'm nearing Medicare and I can move from NJ (only way to stay covered for pre-existing cancer was to stay here and keep my individual out-of-sight expensive plan. Oh, I was so hoping there would have been early Medicare buy-in, as Hillary urged....), my own house will be worth even less when I try to sell.

And now Obama wants to use his Obama/Pete Peterson Cat Food Commission wo mess around with SocSec.

A Dem prez going after the foundation stone of the FDR safety net, doing what Repubs have worked for since the '30's! What is this world coming to?

NPR guest just now was on, pointing out that with the fall in home ownership, the rental market is tightening and rents are beginning to rise.... That is not a silver lining for those losing their homes, of course, but great news for those with rental properties.

But as your updated HOLC link points out, it was not the be all and end all of solutions with a 20% default rate.

A more recent article introduces the fact that strategic defaulting is a new term, the same thing happened under HOLC.

Yet although HOLC made mortgages its loan officers thought would succeed, about 20 percent of the new loans defaulted anyway, a number not as high as the default rate with HAMP but still extraordinarily high. While some of those who failed to pay were victims of high levels of unemployment or other unforeseen circumstances during the Great Depression, the majority of those who defaulted, in the opinion of the bailout agency's loan officers and appraisers, were capable of paying but knew a good deal when they saw one.

An analysis of HOLC's records by Columbia University economist C. Lowell Harriss, published in 1951 by the National Bureau of Economic Research, found that HOLC personnel classified about 65 percent of all defaults as resulting from borrowers' "noncooperation" with the agency after receiving a new mortgage, or from an "obstinate refusal" to pay. "This type of noncooperation could sometimes be attributed to a desire to obtain free housing . . . an object that, in view of HOLC's nature, was not difficult to realize," Harriss wrote.

{snip}

Yet the HOLC loan officers gained nothing from foreclosing on homeowners, and still they ultimately decided that as many as 135,000 homeowners were an early version of the strategic defaulter. This shouldn't be so surprising. Incentives mattered then, and they still do.

Since the program was voluntary for the banks (and they seem to make more money on writing off bad debts rather than correcting them) they have no incentive to work with anyone.

If the problem is lack of clarification why didn't whoever is in charge of the program sit down with the heads of the major banks and get it clarified?