$1 Billion Drop In Much Bigger Bucket

You know, these guys (a private group) are helping people, so I’m not going to criticize them in any way. But that doesn’t mean I’ve got nothing to say…

$1 Billion Pledged to Help Fend Off Foreclosures

Neighborhood Assistance Corporation of America, an 18-year-old housing advocacy group, yesterday announced it would commit $1 billion to refinancing the loans of lower-income people at risk of losing their homes.

The financing will come from CitiGroup and Bank of America, which have been lending money for years to borrowers screened by the nonprofit group. NACA, of Boston, said it had helped put 50,000 people in homes since its creation.

“If we put people in the front door and they’re being forced out the back door, then we’re not stabilizing neighborhoods, which is part of our mission,” said Bruce Marks, the group’s chief executive.

I can’t fault them for trying to help some people out of a tough jam, especially since they’re not crying to the government to get their funding.

But if anyone thinks this will do a thing to stabilize these neighborhoods, you’re fooling yourselves. The problem is FAR too large for a measly $1 Billion to solve:

The group expects to refinance about 7,000 mortgages — a small number, given estimates that more than 1 million homeowners nationwide could be at risk of foreclosure.

So for every homeowner that this group helps, 142 are still in danger of foreclosure.

Again, I credit these guys for what they’re trying to do, and I’m sure those 7,000 will be very glad to get a helping hand. But I’m reminded of the Titanic. These are the lucky souls who are making it into the lifeboats. Everyone else is braving the freezing water, and hoping to stay alive— against nearly insurmountable odds.

  • LLR

    Just wait. I read an article yesterday about how the Democrats want the gov’t to help bail these people out.

  • http://www.belowthebeltway.com Doug Mataconis

    Brad,

    The other question is whether refinancing is really going to help these people. If they are having trouble paying their mortgages, they obviously have financial problems. Those problems aren’t going to go away after the loan is refinanced.

  • http://unrepentantindividual.com/ Brad Warbiany

    Doug,

    I hear what you’re saying… Given that this is a private entity that will be refinancing, I think they’ll try to pick and choose the people who actually have the ability to pay their mortgage, but are getting hammered by a resetting ARM, or are already at a too-high interest rate. I think they’d be targeting people in a bad loan, not people who simply can’t afford their house.

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  • http://1000typewriters.blogspot.com/ 1000monkeys

    I guess I’m wondering who this bailout is for.

    Nonprofits say working families were taken advantage of by predatory lending so it’s them we need to help. Local governments are cringing over the idea of a run on housing and plummeting property taxes. And everyone with a stock portfolio is anxious to prop the market up.

    Oh wait, I almost forgot about the kind folks who lent the money in the first place (from the WaPo article):

    “If we foreclose, we lose 50 cents on the dollar generally, and the cost to restructure the debt is typically a heck of a lot lower than that,” Litton said. “That’s our motivation.”

    Are we bailing out the banks again?