The Obama administration keeps doing things about the housing crisis but none of them seem to work.
The Obama approach is to selectively intervene in the housing market and channel subsidies to politically protected groups. Some homeowners who are underwater get help and others don’t.
Obama hands out resources to those who can navigate the bureaucracy. That’s the only way with socialism. When you don’t allow the free market to award resources to those who will pay the most for them, the only alternative is a blizzard of paperwork to give benefits to those willing to wait for them and to fill out all the papers.
Peter S. Goodman, business editor at the Huffington Post, does not believe that Obama has intervened enough in the free market. He writes:
Three years ago, the president stood in Mesa, Ariz., a community ravaged by foreclosure and announced the creation of a new program that he said would spare 3 million to 4 million homeowners from that fate by lowering their mortgage payments. As of last month, fewer than 1 million homeowners had received permanent loan relief under the program, according to a recent scorecard.
From the beginning, millions of applicants who requested help have confronted chaos, disorganization and conflicting instructions. Mortgage companies have repeatedly lost documents and demanded new sets, only to mislay the replacements, too. Borrowers seeking customer service have been switched from office to office (as if it were some corporate version of speed-dating) while enduring maddeningly long hold times. They have received letters on one day congratulating them for gaining approval for lower payments, and the next day informing them of the pending disposition of their home at a sheriff’s sale.
Treasury officials like to explain all this misery and confusion by noting that the banks were never built to handle loan modifications, or paperwork in general, which is perversely true. Back when they were handing out loans to anyone with a name, banks did not slow themselves down over concerns about niggling things like income verification. How can they be expected to suddenly become masters of the filing cabinet?