Q: How do homeowners fit into the bailout? A: They don’t


Remember when the Bush administration touted its HOPE NOW plan for homeowners? The bill promised to help struggling homeowners who had “good” credit, e.g., only those who weren’t in subprime loans or so behind on mortgage payments their credit scores had become tarnished, have the possibility dangled in front of them of working their way into a new FHA loan. Yet critics say it was hot air dressed-up as aid that had nothing underneath its pretty costume. Not only did it leave behind millions of strained homeowners, real help was absent for even those eligible.

Now that the bailout package has been hatched out, it looks like Bush and Congress have once again left struggling homeowners in the lurch, this time sending relief to those who helped put every homeowner in crisis in the first place.

For one thing, the Treasury Department’s plan “encourages” loan modifactions for troubled loans. That’s the same thing the Treasury has been “encouraging” for a year with hardly any response from servicers. Secondly, the Tresury is required to create “reasonable” loan modifications for those loans it controls. But Adam Levitin at Credit Slips, a consumer advocacy site, notes it’s unlikely the Treasury will actuallly control any truobled mortgages directly. That still leaves millions of Americans on the brink of foreclosure.

Levitin calls the bill “particularly troubling,” adding it will be taxpayers who will bear the cost of the bailout and the increasing foreclosures the plan failed to prevent. And he adds that some of the overisight provisions are “empty shells,” and that the coflict-of-interest regulations are vague and meaningless. He adds: “The bottom line for consumers: nothing for you.” You can read the whole post here, along with more of Levitin’s thoughts on the package.