Congress Attempts To Limit Foreclosures In 2011

The foreclosure crisis is the focus of hearings on Capitol Hill this week. The House Oversight Committee is expected to investigate the estimated two million homes in the U.S. expected to fall into foreclosure this year. Host Michel Martin speaks with NPR Correspondent Chris Arnold about the ongoing crisis.

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MICHEL MARTIN, Host:

I'm Michel Martin and this is TELL ME MORE from NPR News.

Coming up, the bonds between girls can grow into strong ties among women. So how come those relationships get twisted and how can parents keep positive relationships on track? The moms talk with the author of "The Twisted Sisterhood" in just a few minutes.

But first, a few more minutes on the State of the Union and the economy. Much of the talk around the president's address has been devoted to the economy. And of course the struggling economy is closely tied to the housing market and the ongoing problem of all those home foreclosures. It's estimated that nearly two million homes will be foreclosed upon this year.

The company, RealtyTrac, says millions more are at least two months behind on their mortgage. This week the foreclosure crisis is the focus on hearings by a House oversight committee.

NPR's Chris Arnold has been closely tracking the foreclosure crisis since before it was even labeled a crisis. And he's with us now from Boston. Chris, thanks so much for joining us.

CHRIS ARNOLD: Hi, Michel.

MARTIN: Now, we're hearing that the numbers, as bad as they are, are likely to get even worse. How is that possible?

ARNOLD: I mean, that's the thing with this foreclosure mess. Part of what's going on right now is that foreclosures had slowed down over the past few months because the courts were kind of rearing their head a little bit and saying, wait a minute, what have these banks been doing? This has to do with this whole robo-signing mess that you probably remember, where it came out that bank employees who were supposed to be going through all the documents for every home - I mean, you're taking somebody's house, it's serious - it turns out they weren't looking at any of the details, at any of the documents. They were signing tens of thousands of these foreclosure affidavits, and it was basically a fraud on the court, if you listen to the lawyers who were upset about it.

So the companies sort of put everything on hold for a while. So that's definitely slowed things down. But as that's been happening, the backlog of foreclosures just keeps building up and building up. And this problem just keeps getting bigger and bigger.

MARTIN: We keep hearing about various things that the White House and Congress have tried to intervene in the problem or at least to kind of staunch the bleeding. Has any of those things worked?

ARNOLD: A lot of them have not worked at all. I mean, you know, this one Help for Homeowners Program, I think, that Barney Frank put out, and it, you know, a billion dollars is something associated with it. It helped one person, you know, after eight months or something.

The most promising one by far is the one that President Obama got behind - this making home affordable plan. That's helped 500,000 people. So that's good. But there was hope that the plan was going to help three to four million people. I mean, that's more the scale of this problem and it's not really coming anywhere near that. So there's still a lot of disappointment even about that plan.

MARTIN: And why have none of these interventions been successful? At least certainly not to the degree that was hoped or hyped.

ARNOLD: The banking system is wild and crazy and complicated, so there's a lot of reasons. But a central one has got to be that the banks have just not implemented this well, and I'm talking about the major banks out there - Wells Fargo, Bank of America, Chase, and the other big ones. They've got to do the legwork. They've got to say, OK, here's borrower X, how much do they make? Let's get them into this program. And there's just been no end of problems there.

And to be fair to the banks, yes, there's two million people all at once going delinquent on their loans. That's a big problem, they weren't geared to deal with it, but they've had three years now to figure out how to deal with it. And all the time I talk to homeowners who - I faxed in my stuff three times, I look like I should qualify. As a reporter, I agree, it looks like they should qualify. And they go around and around faxing things. The bank loses them. Eventually they lose their house.

And you know, I've seen this happen over something that's like a tax document that they sent in three times when the bank says they didn't get it. So things are still very broken and that's got to be a big part of why.

MARTIN: Well, the question, though, has to be, if these are administrative failures, why is there no penalty for that?

ARNOLD: Well, that's exactly the question that some oversight officials in Washington have been asking. And that, you know, might come up at this hearing later this week. The oversight inspector general for TARP or one of them has been saying exactly that. Saying, look, you know, the government came up with this pretty impressive program. The banks are not implementing it well, and now the Treasury Department and the administration hasn't done anything to penalize the banks for that, or to kind of hold their feet to the fire.

And that's where some of the conversation is focusing now. What can be done to sort of push this and make it work better?

MARTIN: So Chris, of course, as we know, there's a new Congress. The House Oversight Committee Chair Darrell Issa has called a hearing for tomorrow to open an investigation into this. He says that he'll be talking about the Troubled Asset Relief Program and the foreclosure crisis. So what do you think we can expect here?

ARNOLD: Well, I think they will look at this issue of oversight, you know, why hasn't this program worked the way it's supposed to work? That's a big question. And I think what's really significant here is that, look, this is the first hearing that this oversight committee is having after the State of the Union. You've got this new divided Congress. The Republicans are in control of this committee.

The first big issue they're bringing up is the foreclosure crisis and TARP, so that might signal a change. The foreclosure crisis has kind of taken a backseat to some of the other problems. Maybe we're going to see some more focus on this.

MARTIN: NPR's Chris Arnold joined us from his office in Boston. Thanks, Chris.

ARNOLD: Thanks, Michel.

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