by David Dayen
The Intercept

When President Obama announced the Home Affordable Modification Program, or HAMP, on February 18, 2009, in Mesa, Arizona, he promised it would assist 3 to 4 million homeowners to modify their loans to avoid foreclosure. Almost seven years later, less than 1 million have received ongoing assistance; nearly one in three re-defaulted after receiving inadequate modifications; and 6 million families lost their homes over the same time period.
Now the program is ending.
Tucked away on page 1,983 of the omnibus spending package, signed into law earlier this month, is the following language: “The Making Home Affordable initiative of the Secretary of the Treasury, as authorized under the Emergency Economic Stabilization Act of 2008 … shall terminate on Dec. 31, 2016.”
This language closes out a series of measures initiated after the financial crisis to aid homeowners facing foreclosure, but mostly, it ends HAMP. Few noted its passage, but progressives should be happy to see it go. Perhaps no program of the Obama era did more significant — and possibly irreparable — damage to the promise of an activist government that can help solve the country’s problems.
HAMP’s failure stemmed from its design. Rather than a cash-transfer program that hands vouchers to distressed borrowers so they can lower their mortgage payments, the government gives the money to mortgage servicing companies, to encourage them to modify the loans. But while the government sets benchmarks to follow, the mortgage companies ultimately decide whether or not to offer aid.
To appreciate why this could never succeed, you must understand that mortgage servicers typically have no direct interest in the loan. They are glorified accounts-receivable departments hired by mortgage holders to process monthly payments, handle day-to-day contact with homeowners, and distribute the proceeds. And with small staffs of entry-level workers, they could only turn a profit if they never need to perform any customer service. Handling millions of individual requests for relief simply overwhelmed them.
Furthermore, servicers make their money from a percentage of unpaid principal balance on a loan. Forgiving principal — the most successful type of loan modification — eats into servicer profits, so they shy away from that, opting for less effective interest rate cuts. Plus, servicers collect structured fees — such as late fees — which make it profitable to keep a borrower delinquent. Even foreclosures don’t hurt a servicer, because they make back their portion of fees in a foreclosure sale before the investors for whom they service the loan. The modest incentive payments in HAMP were no match for the contrary financial incentives toward foreclosure, rather than modifying loans.
With servicers in control of modifications, they could manipulate the program to pile more bad debt on borrowers and squeeze a few extra payments out before foreclosing. Servicers chronically lost borrowers’ income documents to extend the default period. They prolonged trial modifications well past three months, so they could rack up late fees. They granted modifications that folded servicer fees into the principal of the loan, increasing the unpaid principal balance — and thus their profit — while pushing the borrower further underwater. And they trapped borrowers after denying a modification, demanding back payments, missed interest, and late fees, with the threat of foreclosure as a hammer.

This often forced borrowers into “private” modifications with worse terms than the status quo. HAMP became a predatory lending scheme rather than an aid program, and even “successful” permanent modifications went sour too often, with high re-default rates.
According to the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), 70 percent of homeowners who applied for the program were turned down for a permanent modification. Despite initially promising a $75 billion commitment to HAMP, through September of this year, the government has spent only $10.2 billion, with an additional $2 billion on related programs. Most of the spending came after the initial years when the foreclosure crisis was at its most acute.
In the most damning revelations of servicer misconduct, employees at Bank of America’s mortgage servicing unit testified in a class-action lawsuit that they were told to lie to homeowners, deliberately misplace their documents, and deny loan modifications without explaining why. For their efforts, managers rewarded them with bonuses — in the form of Target gift cards — for pushing borrowers into foreclosure.
Despite this, the Treasury Department never permanently sanctioned a single mortgage servicer for HAMP violations by clawing back incentive payments. They never used their leverage to force better outcomes. Instead, former Treasury Secretary Timothy Geithner told government officials, HAMP’s purpose was to “foam the runway” for the banks. In other words, it allowed banks to spread out eventual foreclosures and absorb them more slowly, protecting bank balance sheets. Homeowners are the foam being steamrolled by a jumbo jet in that analogy.
In recent years, the government tweaked HAMP, opening it up to more borrowers and giving higher incentive payments for principal reduction. But after years of horror stories, homeowners reasonably wanted nothing to do with the program, the way squirrels learn not to eat the poisonous berries. In the most recent SIGTARP statistics, 13,231 homeowners started permanent HAMP modifications in the third quarter of the year, while 13,226 others re-defaulted, leaving a net increase in active modifications of just five. Permanent modifications have decreased in 16 of the last 17 quarters.
Treasury Department spokesperson Mark McArdle has defended HAMP by touting the fewer modification denials in recent years, which coincides with fewer homeowners bothering to apply. Treasury also alleges in recent reports that 58 percent of borrowers denied a HAMP modification received some alternative modification from their servicer or resolved their delinquency, without noting whether that alternative made the homeowners’ financial situation better or worse.
Treasury’s claim comes from surveys of the servicers themselves, who have incentives to say that they help their customers. But we know that approximately 6 million families have lost their homes since the financial crisis began in September 2008, and unless few of them ever tried to get a HAMP modification, it’s hard to square the numbers.
You can excuse many of Obama’s accomplishments that failed to reach their goals by arguing that they sprung from a broken Congress, with supermajority hurdles ensuring Republican input. But HAMP, after being authorized by the legislation that gave us the bank bailout, was designed and implemented entirely by the White House. Congress authorized the executive branch to “prevent avoidable foreclosures,” and left the details to them. That HAMP became the result is the purest indication of how the administration prioritized the health of financial institutions over homeowners.
It also unnecessarily reinforced the old Ronald Reagan dictum that the most dangerous words in the English language are “I’m from the government and I’m here to help.” Families who sought out a government program to assist them in a time of need saw only a mortgage servicer who lost their paperwork, strung along their requests, and injured their financial security. The millions who experienced this abuse will find it difficult to ever believe in government again.

by David Bacon
Whose fault is it?

Using the phrase “no fault of their own” in discussing undocumented young people does not encourage us to look at the roots of the poverty and violence their families experience.  Blaming undocumented youths’ parents avoids assigning responsibility for their displacement and migration beyond the families themselves.
When President Obama introduced his executive order in 2012 to defer deportation for young people (Deferred Action for Childhood Arrivals, or DACA), the White House website said it would “stop punishing innocent young people brought to the country through no fault of their own by their parents.
Last year, in the Republican assault on the President’s next order that would have extended DACA to include other family members (Deferred Action for Parents of Americans, DAPA), Jeff Denham, a right-wing Republican Congressman from California’s San Joaquin Valley, used the same phrase. Taking pains to explain that opposing President Obama did not mean he supported deporting young people, he explained, “I have voted repeatedly in Congress to protect children who were brought into this country by their parents or guardians through no fault of their own.
The phrase “no fault of their own” sounds sympathetic. Using it to justify halting deportations implies good intentions towards at least some young people without papers. Yet the idea has other troubling implications as well.
If young people came here “through no fault of their own,” then whose fault was it? Denham and Obama both say, “by their parents [and guardians].” Mothers and fathers made the decision to cross the border without papers. Therefore the parents are responsible for their children’s lack of legal immigration status. The fault is the parents’.
This is also the argument presented by the administration to justify building two new detention centers in Texas to hold mothers and children from Central America. Two summers ago the President warned parents in Guatemala and El Salvador that they were endangering their children by bringing them north. Don’t come, he said. If you do, you will be detained and deported.
Of course, people came despite the warning. The pressures to leave home are much more powerful than even the certain knowledge that imprisonment in a detention center awaits them once they cross the border.
Children are not coming to the United States because they have bad parents. They come because poverty and violence make survival difficult and dangerous in their communities of origin. Many are joining family members who are already here, having fled Central American civil wars or having come to find work and establish a base for reuniting divided families.
Many of the young people who tell their stories in Dreams Deported, a new book edited by Kent Wong and Nancy Guarneros, describe the memory of the experience, as it is retold in their families. Vicky’s family in Mexico “was too poor to pay for her mother’s medication and Vicky couldn’t find a job to support her parents.” Renata Teodoro says, “My father had been working in the United States for many years, and we survived on the money he sent us.
The book paraphrases other accounts. “The Gonzalez family left behind a life that Adrian does not remember. What he does remember is that his parents came to this country with hope for economic security.” The parents of Steve Li “experienced the extreme poverty, violence and corruption of Peru. Conditions for Steve’s family went from bad to worse when their restaurant was vandalized and their family was threatened.
The phrase “no fault of their own” does not encourage us to look at the roots of the poverty and violence these families experience. It especially avoids assigning responsibility for their displacement and migration beyond the families themselves. Yet individual families together make up huge movements of people responding to economic changes over which they have no control.
After the North American Free Trade Agreement (NAFTA) went into effect, for instance, the number of Mexican migrants in the U.S. went from 4.5 to 12.5 million in 20 years. The new immigrants were farmers driven off the land after being undercut by cheap U.S.-subsidized corn flooding the Mexican market, or workers suddenly jobless after waves of privatization. Like Renata Teodoro’s father, once they arrived in the United States, they made up the backbone workforce sustaining agriculture, meatpacking, janitorial services and other industries, laboring at the lowest wages.
The companies that dumped the corn in Oaxaca, and those that paid illegally low wages to Oaxacan farmers to pick strawberries in Watsonville, certainly share some of the “fault.” And they definitely reaped most of the benefits. But when Obama and Denham say children came through “no fault of their own,” they are not pointing at the profiteers, much less at the treaties and policies that make displacement and exploitation possible and profitable.
In reading the testimony of the young people in Dreams Deported, it’s clear that parents had little alternative to coming north, and bringing their children with them. Yet they are not victims. They are simply people struggling to survive and make a place in the world for their families. As Roxanne Dunbar-Ortiz says, in the context of Native American genocide in North America, “survival is dynamic, not passive. Surviving genocide, by whatever means, IS resistance.”
Sergio Sosa, a Guatemalan migrant who now directs Omaha’s Heartland Workers’ Center, says the same thing: “Mams and Qanjobales”-two indigenous groups in Guatemala-”face poverty and isolation, even the possible disappearance of their identity. But they didn’t choose this fate. People from Europe and the U.S. crossed our borders to come to Guatemala, and took over our land and economy. Migration is a form of fighting back. Now it’s our turn to cross borders.
Dreams Deported presents migrants as social actors, as resistors rather than victims. The phrase “no fault of their own” casts young people as innocent victims of their parents’ actions. The reality is that the young people who have built the movement of the DREAMers, fighting for the right to go to school, for legal status and for change in immigration policy, are anything but victims. The book recounts the family experiences of migration, life in the U.S., and then the shock of confrontation with immigration authorities leading to deportation. Then it tells stories of resistance, documenting the ways young people pioneered a movement that successfully rescued family and friends from jails and detention centers.
This is the third book in a series produced by activists in the Dreamers movement, published by the UCLA Center for Labor Research and Education. The first, Underground Undergrads, was published in 2008, when the possibility of immigration reform with some degree of legalization seemed possible to many people. It was a “coming out” moment, in which the first of the movement’s organizers sought to make visible a generation of undocumented young people who were beginning to assert their rights. It was followed four years later by Undocumented and Unafraid, which profiled the growing movement in the wake of the huge effort to pass the DREAM Act. Now Dreams Deported chronicles the difficult struggle against deportations.
First introduced in 2003, the DREAM Act would have allowed undocumented students graduating from a U.S. high school to apply for permanent residence if they completed two years of college or served two years in the U.S. military. The act would have enabled an estimate 800,000-plus young people to gain legal status and eventual citizenship. In 2010 the Act failed in Congress, but for the seven years before that, undocumented young people marched, sat-in, wrote letters and mastered every civil rights tactic in the book to get their bill onto the Washington DC agenda.

(Due to lack of space we are publishing only part of the story. You may read the full story at: http://inthesetimes.com/article/18568/dreams-deported-undocumented-unafraid-dream-act).