On the US Budget Deficit in 2010

Posted on October 26, 2010 by Dr. David Edward Marcinko MBA MEd CMP™

Now North of $1.3 Trillion Dollars

By Children’s Home Society of Florida Foundation

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The federal fiscal year for 2010 concluded on September 30th. The Office of Management and Budget and Department of Treasury have released the official figures for fiscal year 2010. The deficit was $1.294 trillion.

Geithner Speaks

Treasury Secretary Tim Geithner noted that the cost of the financial rescue of banks and automotive companies was lower than expected. He stated, “By carefully managing the emergency initiatives to stop the financial panic and by accelerating our exit from those investments, we have significantly lowered the cost to taxpayers, bringing the costs of the financial rescue down by more than $240 billion this year.”

TARP

The Troubled Asset Recovery Program (TARP) cost to Treasury was $9 billion in 2010. During this year, the Federal Government also spent $52.6 billion to support the housing industry through troubled lenders Freddie Mac and Fannie Mae.

Deficit Concerns

The deficit declined slightly from 10% in 2009 to 8.9% of the 2010 gross domestic product (GDP). Tax receipts for 2010 were $2.16 trillion or 14.9% of the economy. Government expenditures were $3.45 trillion or 23.8% of the economy. Senate Budget Committee Ranking Minority Member Judd Gregg (R-NH) expressed concern about this deficit and noted, “These abrupt and shocking changes in our fiscal situation cannot be dismissed as “inherited” problems when the tally of the majority’s spending spree has climbed into the trillions.”

Assessment

The Fiscal Commission appointed by President Barack Obama is developing a plan to reduce the deficit. The target for the Fiscal Commission is to reduce the current 8.9% GDP deficit down to 3% of GDP within five years.

Editor’s Note: Your editor and this organization take no position with respect to the many financial and tax options that are available to Congress. This information is offered as a public service to our readers.
Conclusion

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Financial Reform Amendment Would Address Loan Modification Problems

Posted on May 16, 2010 by Dr. David Edward Marcinko MBA MEd CMP™

Proposed New ‘Office of the Homeowner Advocate’

By Paul Kiel, ProPublica – May 7, 2010 11:37 am EDT

An amendment to the financial reform bill filed recently by Sen. Al Franken, D-Minn., and Sen. Olympia Snowe, R-Maine, would create a special office to assist homeowners who are facing problems with the administration’s mortgage modification program. The measure has White House support [1], but is opposed by the financial services industry.

Mortgage Servicers

As we’ve reported, homeowners and housing counselors frequently complain that mortgage servicers frequently lose financial documents [2] and make mistakes [3]—mistakes that can result in foreclosure [4]. Homeowners regularly wait several months [5] for an answer on their application.

About $75 billion has been earmarked for the program from the TARP [6], but very little of that has so far been spent owing to the small number of permanent modifications so far: about 228,000 as of March [7].

The amendment proposes a new “Office of the Homeowner Advocate” that would be devoted to solving homeowner problems with the program. Right now, homeowners with complaints are told to call the HOPE Hotline, which has a staff of counselors to handle escalations—a process that’s been criticized as ineffective [8].

[picapp align=”none” wrap=”false” link=”term=mortgage+reform&iid=1896936″ src=”a/3/e/7/Jesse_Jackson_Rallies_e4dd.jpg?adImageId=12804308&imageId=1896936″ width=”380″ height=”246″ /]

Office of Homeowner Advocate

Under the amendment, all homeowner complaints about servicers would go to this new “Office of the Homeowner Advocate” within the Treasury Department. That would effectively create an appeals process for homeowners who think they’ve been wrongly denied a modification—something that housing counselors and other consumer advocates have long said is desperately needed [9].

“A mandated homeowner’s advocate, built into the process and reportable to Congress, would counteract the servicer unresponsiveness we’ve heard so much about and be able to serve as a recourse for homeowners,” said Richard H. Neiman, superintendent of banks for New York State and a member of the Congressional Oversight Panel for the TARP. Neiman has been pushing for the creation of the office.

The office would have the power to penalize servicers for noncompliance with the program‘s guidelines, but would need the sign-off from Herb Allison, the Treasury official in charge of the TARP, to do so. The Treasury currently has the power to penalize services, but so far has not done so [10].

Financial Services Industry Opposition

The idea has already garnered opposition from the financial services industry. Scott Talbott, a lobbyist with the Financial Services Roundtable, which counts the largest mortgage servicers among its many members [11], said the group opposed the amendment because it would just create “another layer of bureaucracy that could actually slow” the program’s process. He also said there is already adequate oversight of the program.

One of the watchdogs that over-sees the TARP, the Government Accountability Office, reported in March (PDF) that servicers have widely varying ways of dealing with homeowner complaints and some were not systematically tracking them. Several tracked only written ones, the GAO said. Another servicer had closely tracked only those complaints that were addressed to a company executive.

“The unnecessary problems with HAMP are found mostly with servicers who have provided inadequate, inconsistent service to homeowners and delayed or denied homeowner assistance on a mass basis,” said Alys Cohen of the National Consumer Law Center.

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Assessment

The amendment has support from Americans for Financial Reform [12] and a host of consumer advocate groups, including the Center for Responsible Lending, the Service Employees International Union and the United Auto Workers.

The amendment also specifies that any candidate for the homeowner advocate position would have to come from an advocacy background and cannot have worked for a servicer or the Treasury in the previous four years. The advocate’s office would be funded out of the TARP and close down after the federal program ends. The idea is modeled after the Internal Revenue Service’s “taxpayer advocate.” [13] It’s not clear when the amendment might come up for a vote.

Link: http://www.propublica.org/ion/loan-mods/item/financial-reform-amendment-would-address-loan-mod-problems-with-homeowner-a

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Do you agree with this new proposal? How might medical professionals and/or financial advisors be affected?

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Geithner Talks Tough about Banks’ Loan Modification Efforts

Posted on May 3, 2010 by Dr. David Edward Marcinko MBA MEd CMP™

But – More Bark Than Bite

By Paul Kiel, ProPublica – April 30, 2010 11:30 am EDT

For nearly a year now, we at ProPublica have been reporting on the problems [1] homeowners have encountered when seeking a mortgage modification [2] under the administration’s program [3].

Yesterday, Treasury Secretary Tim Geithner for the first time acknowledged the depths of the problems, but didn’t offer any new solutions. He committed to release more detailed data on how banks and other servicers are faring—a promise Treasury first made six months ago.

Geithner Speaks

“We are concerned by the wide variation in performance we see across servicers and by the countless frustrated phone calls we receive from borrowers,” Geithner testified yesterday before Congress. He added that the Treasury was “troubled” by “reports that servicers have foreclosed on potentially eligible homeowners” and frequent complaints from homeowners that servicers lose their documents. He said servicers are “not doing enough to help homeowners” and that it was not “acceptable.”

From the Treasury Department

This isn’t the first time Treasury Department officials have directed some tough talk [4] at servicers, including vague threats [5] of penalties [6]. But it remains to be seen whether, as Geithner says, the Treasury will follow through and punish servicers that break the program’s rules. Under the program, which involves paying incentives to servicers, investors and homeowners to encourage modifications, the Treasury has the power to punish servicers by withholding those payments. But Treasury has never issued any such penalties. Nor has the government outlined how much such penalties might be.

Geithner did promise to publish within a month or two more detailed information about each servicer’s performance, data that could give a much clearer picture of how servicers are treating homeowners. Treasury officials have actually been promising to release this sort of data since last year [7]. In December, Herb Allison, the official in charge of the TARP, said [8] it would be released in January. Like everything else with the government’s loan mod program, it’s taken several months longer than it was supposed to.

More Granular Data

The new, more detailed data will show how long it takes each servicer to answer calls from homeowners, how long they take to process applications, and the number of customer complaints each receives. A Treasury spokeswoman also said the reports will provide some sort of breakdown of how many people have been denied mods for which reasons, but it’s not clear yet if that data will be made available by servicer.

Up until now, the Treasury has only been releasing basic information for each of the largest servicers. And each month, we’ve transformed that data into an easy-to-digest breakdown [9].

Assessment

One major problem, the data show, has been the large volume of homeowners in limbo (376,000 as of March). A trial period under the program is supposed to last three months, but for those homeowners, it’s stretched longer, sometimes as long as ten months [6]. In total, 1.2 million homeowners have started trials since the program launched a year ago, but only 231,000 have made it to a permanent modification.

Link: http://www.propublica.org/ion/bailout/item/geithner-talks-tough-about-banks-loan-mod-efforts-but-more-bark-than-bite

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