Yesterday, administration officials stood alongside state attorneys general to announce a $25 billion mortgage settlement. It was reminiscent of a big announcement by administration officials three Februarys ago involving an even bigger number: $50 billion. That money was supposed to go to the administration’s signature mortgage modification program, which eventually became HAMP.

Three years later, HAMP (the Home Affordable Modification Program) is widely considered a failure. That failure provides key context to yesterday’s announcement.

President Barack Obama, joined by federal and state officials, speaks about the details of a $25 billion housing settlement between federal and state officials and mortgage lenders on Feb. 9, 2012. (Kevin Dietsch-Pool/Getty Images)

“If people are eligible for a loan modification, the banks won’t screw up those decisions anymore,” said Iowa Attorney General Tom Miller.

North Carolina Attorney General Roy Cooper made a rather pointed reference to HAMP: “I think strong, court-ordered enforcement with teeth distinguish this deal from those earlier efforts to help homeowners.”

As we’ve reported extensively over the past several years, homeowners seeking to avoid foreclosure by gaining a loan modification have often been frustrated by banks’ errors and delays. In the worst cases, the banks’ shoddy mortgage servicing has led to wrongful foreclosures. The errors have sometimes continued even after homeowners got an elusive modification.

When HAMP was launched, it came with the promise that mortgage servicers would have to abide by clear rules. The handbook laying out these rules now approaches 200 pages. But as we’ve detailed, enforcement of those rules has been lacking.

According to the state attorneys general, the settlement directly addresses that. The five big servicers — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial (formerly GMAC) —  that will sign on to the not-quite-finalized deal have agreed to follow a raft of new rules. Some of these rules, like how quickly a bank must respond to a homeowner’s completed modification application, come straight from HAMP.

What’s different this time, they say, is that there are clear consequences for rule-breaking. But plenty of questions remain, and only time will tell if the latest promises of mortgage-servicer accountability will be kept.

“The big picture is that these new rules are only good if servicers follow them,” said Alys Cohen of the National Consumer Law Center. “Enforcement will really matter.”

As critics like Firedoglake blogger David Dayen have pointed out, the new system relies to some extent on “self-assessments” by the banks to identify violations of the new rules. But Miller, the Iowa attorney general, notes that consumers will be able to complain to their state’s attorney general, who will make sure their complaints are heard.

The settlement does create a “monitor” who will have the power to impose penalties. The administration says a bank could be fined up to $1 million per violation and up to $5 million for repeat violations. But the details released so far don’t show how violations will be applied or counted. (If thousands of homeowners, for instance, have been wrongly denied modifications, will that be counted as one violation or thousands?)

HAMP came with no penalties for participating mortgage servicers that broke the rules. It was only in the past several months that the Treasury Department decided to address servicer noncompliance — by temporarily withholding the program’s subsidy payments. (As for the millions of dollars in incentives that Bank of America, JPMorgan Chase and the other servicers were paid over the previous years, they get to keep that.)

The settlement is not only supposed to have more sticks than HAMP, it’s also a chance for the administration to breathe life back into the old program. Treasury recently made major revisions to HAMP to allow more homeowners to qualify for modifications.

“The extension and expansion of HAMP are designed to be complementary to the settlement,” said Treasury spokeswoman Andrea Risotto.

For instance, the program was set to end at the end of 2012 but now will accept new homeowners until the end of 2013. (The banks will operate under the umbrella of the settlement through 2014 or so.) In addition, Treasury has broadened some of the criteria to make it easier to qualify.

Some of the millions of homeowners who were rejected might be eligible for a second shot. Hundreds of thousands of homeowners were originally granted “trial modifications” through the program in 2009 and early 2010, only to be denied permanent modifications many months (and sometimes more than a year) later. Most of those homeowners started those trials by just giving their income information over the phone. They’ll be eligible to reapply, according to the proposed rules.

One of the recent changes to HAMP could reduce the cost of the settlement for banks — and leave taxpayers footing a chunk of the bill.

As part of yesterday’s deal, the five banks agreed to reduce billions in mortgage debt for homeowners in danger of foreclosure. Most of those principal reductions — about 85 percent according to Housing and Urban Development Secretary Shaun Donovan — will likely be for loans that the banks hold on their own books.

HAMP also has long offered investors incentives to encourage principal reductions. For loans owned by banks, the money goes right to them. In January, Treasury tripled those incentives. In cases in which a loan qualifies for HAMP, the government will now pay investors, often the banks themselves, up to roughly two-thirds the cost of a principal reduction.

The banks have agreed to perform at least $10 billion worth of principal reductions as part of the settlement. Because it’s unclear how many of the principal reduction modifications will be done through HAMP, it’s impossible to say how much of that will be covered by the government subsidies.

So far, about 40,000 HAMP modifications have been done through HAMP’s principal reduction program at a median reduction of $67,196, meaning that roughly $2.7 billion in principal has been reduced. If the banks find HAMP more attractive because of the increased incentives, that amount might increase sharply, and HAMP could experience something of a renaissance.

“Those people lucky or smart enough to stop making payments on their homes may get their loan balances reduced,” said Bove, he vice president of equity research at Rochdale Securities. “Other beneficiaries of the agreement may be homeowners who have seen the value of their houses drop below the size of their mortgages. They get a freebie that other homeowners who have paid their mortgages down will not get.”

Dick Bove

Bove, who called the agreement “the mortgage deal from hell,” said doing so will help those who bought homes with little money down and who either fell behind on payments or stopped paying their mortgages altogether.

“Those who brought down their principal with 20 percent down payments and who kept up on their obligations would not benefit, and ultimately could suffer if the mortgage modifications and principal writedowns drag down neighborhood property values.”

“The government has selected a small minority of homeowners to get this benefit (1 million of 75 million or 1.3 percent of the total),” he wrote in an analysis. “Homeowners who made large down payments on their homes or made the terrible mistake to pay down the principal on their mortgages do not qualify. Homeowners who made minimal or no down payments will get the windfall benefit of a lower principal repayment or a cash payment.”

Banks Also Fined By Federal Reserve

The Federal Reserve Thursday also said it was imposing penalties totaling $766.5 million on five U.S. banks over their mortgage servicing practices.

The five financial institutions are Bank of America  JPMorgan Chase, Citigroup  Wells Fargo  and Ally Financial.

The Fed said it was imposing the penalties for “unsafe and unsound” practices in “mortgage loan servicing and foreclosure processing,” wrote CNBC.

The aging Baby Boomer generation will bring unprecedented financial burdens to state and federal budgets – possibly breaking the bank – unless  the current levels of institutionalization are significantly reduced.

Nursing home reimbursements are costing the country hundreds of billions annually. The costs are so high that most people who are institutionalized, especially if they live for several years after confinement, eventually are forced to go on welfare.

Home care is the best option for large percentages of the elderly to stay off the welfare roles – Title IX – by which their institution’s bills are paid by the government. Currently, in Connecticut, that amounts to about $12,000 each month, per person, and that is virtually the tip of the iceberg.

Not everyone is capable of caring for an elderly relative at home home and not everyone should. But to make it easier for those who are considering such a move, the LA Times today ran an article that hits some of the highlights of preparing yourself, your home and your relative for what is certain to be a life-altering decision for everyone involved.

From the Los Angeles Times:

Stuff happens, so be prepared. If they have a personal emergency response system, your parents can call for help, 24/7, with only a push of a button. Newer systems can detect when a person has fallen down, so even if they’re too injured to push the button, the system will automatically alert an operator.

Being prepared can prevent stuff from happening. In the long run it’s important to create an environment where such a system is needed as rarely as possible, says Linda Ercoli, director of geriatric psychology at UCLA. “If you fall and break your hip, you might be able to push a button and get help, but the fact remains that you’ll have broken your hip.”

Your parents’ home may be booby-trapped with all sorts of falls waiting to happen — including slippery showers or tubs (add grab bars), slide-prone throw rugs (get rid of them or tape them down) and fate-tempting steps and stairs (consider installing ramps or even chairlifts). Poor lighting is another open invitation for your parents to take a tumble or bang their heads or stub their toes. With brighter, better-positioned lights, they can see what they’re doing and where they’re going.

Be an alarmist. Smoke and carbon monoxide alarms should be standard in every home. But your parents might also benefit from other, more specialized alarms, for example, an alarm that goes off if a pot has been left unattended on the stove for too long, or one that reminds them to take their medications (and alerts someone else if they don’t).

Life-simplifying devices. Clothing that fastens with Velcro — instead of buttons or zippers — can make a welcome difference for fingers stiff from arthritis. And for backs no longer terribly keen on bending, an extra-long shoehorn can be a real blessing.

Staying connected. Isolation can be a problem for seniors, especially as they become less mobile. If their hearing has also gone downhill, talking on the phone may be difficult. But a phone with amplified speakers can help, and if their eyes aren’t so sharp anymore, big buttons can help too. So can email with big fonts.

Senior centers and adult day care are other good options for those who can get to them — as are pets, at least in the right circumstances.

Food. Nutrition can be problematic for seniors. “Will they eat right — or even at all?” Perhaps your parents are eligible for Meals on Wheels services. Also, senior centers often offer no- or low-cost lunches. You might even hire someone to shop for groceries and prepare meals.

Professional services. Staying in their own home can be a lot easier for your parents if they don’t need to worry about keeping it clean or keeping the yard looking good. You can hire professionals to do those and almost any other chores your parents might no longer feel up to.

Taking care of business. Maybe it’s time for you to take charge of your parents’ finances — pay their bills, balance their checkbook. And it’s important for them to consult an elder law specialist. How they handle their assets can have big-bucks repercussions down the road, affecting their eligibility for programs like Medicaid, to name just one example.

Take care of yourself too. Worrying about and caring for your parents can wear you down. You can become isolated yourself and find yourself thinking, ‘I want my life back.’ Part of the challenge is the guilt you feel. That’s where caregiver support groups come in.

Resources. Countless agencies and organizations are dedicated to providing invaluable — but often free or low-cost — senior services. Information about many of these is available from your local Area Agency on Aging.

The Times did a good job of highlighting some of the ways to prepare for elder care. There are many more of course, and the emphasis will change drastically if elderly parents move into their children’s homes. But the basics are still essentially the same … prepare your home and yourself for a new set of priorities, and above all retain your sense of humor.

Andy and Miriam Miranda don’t fit the historical profile of homeless veterans. Former teachers with master’s degrees who have a six-year-old son, they have lost a house to foreclosure and were evicted from an apartment for falling behind on rent.

Last year, the family spent six months living in a New Haven homeless shelter.  They now reside in a West Haven rental, thanks to a federal subsidy program for homeless veterans.

“I need a parachute so I don’t crash,” said Andy, 51, who was in the Air Force from 1979 to 1983.

Homeless veterans have long been predominately single males, typically Vietnam War vets with mental health or substance abuse problems.  Now, a growing number of veterans with spouses and young children, many returning from deployments in the Middle East, are changing the face of homeless veterans in Connecticut and across the country.

“Whether the communities of Connecticut are prepared for them is another question,” said Linda S. Schwartz, commissioner of the state Department of Veterans Affairs.

In 2011, a record 135 veterans’ families with housing crises sought help from the VA in Connecticut, said Preston Maynard, director of homeless programs in Connecticut. Only 15 families appealed for help just three years ago, he said.  “We’re seeing more and more.  It’s sad,” Maynard said.

Veterans Administration Seeing Spike In Homeless Vets With Families

Nationally in 2010, the VA saw 4,383 veterans’ families in its homeless programs—an 86 percent increase over 2009, according to a VA report on homeless veterans.

While the number of homeless veterans’ families has been increasing, the total number of homeless veterans, mostly single males, dropped 12 percent in 2011, according to the VA. The annual Homeless Assessment Report showed 67,495 homeless veterans counted on a single night in January, 2011, a drop from 76,329 the previous year. The overall decrease has been attributed to programs which provide subsidized housing, financial help, and counseling.

Veterans advocates say the statistics don’t capture the need, noting that veterans often are reluctant to seek help because the military places a high value on self- sufficiency. Returning veterans are up against a tight economy and a scarcity of transitional housing for veterans with families, with a growing number of them women with children, said Christopher McCluskey, director of forensic and veterans’ services at the Community Renewal Team (CRT) of Hartford.

CRT is under contract with the VA to run a new program designed to help very poor veterans attain housing stability and serve most communities in Hartford, Middlesex and New Haven counties, called Supportive Services for Veterans Families (SSVF).

McCluskey said veterans have added challenges to securing jobs and housing, including health issues, post-traumatic stress disorder, traumatic brain injuries, and “just the trauma that comes out of wartime.”

Maynard, of the VA, noted that of the 600 Connecticut National Guard soldiers who returned from Iraq in November, 2010, about 30 (five percent) had no home to go to.

Of veterans’ families who have sought housing help from the VA, Maynard said many live in cramped apartments with other families. They include young mothers escaping domestic violence, men who have lost construction jobs, or veterans whose unemployment benefits have run out.

Josheka Womack, an Army veteran and mother of a four-year-old girl, said without her mother’s help, she and her daughter would be homeless. Womack, her daughter, her four siblings and a nephew live in her mother’s apartment in Bridgeport.

Womack, 29, who has an associate’s degree in finance, came back from Iraq in 2004.  Since then, she has ricocheted from her own apartments in Bridgeport to living with her mother, while engaging in fruitless job searches and taking job-training courses.  The salary she made while in Iraq paid for her first apartments, and now she finally sees a chance for housing stability.  In the fall, she started working the overnight shift at the Stamford Post Office, where veterans are given hiring preference.

“I love the Post Office,” said Womack, adding that she is worried because the distribution center where she works has been threatened with closure.

Margaret Middleton, executive director of the nonprofit Connecticut Veterans Legal Center, called Womack “smart and hardworking—and unfortunately, an incredibly compelling example” of how the economy has been “devastating for veterans trying to care for families.” The center helped Womack in a dispute with one of her landlords.

A new transitional residence for homeless female veterans with young children opened in Bridgeport in November.  To date, only four women have moved in so far, none with children, said Joy Kiss, executive director of Female Soldiers/Forgotten Heroes, which runs the home.  The residence can house 15 women with children, with a maximum age of two years old.  Kiss said that the age cut-off may be limiting applicants, but “being a new program, we wanted to start slowly.”

She said the agency is doing outreach and networking to boost occupancy. “Women are different from men,” she said. “It’s harder to find them.”

Another transitional residence for homeless women veterans is planned in Norwalk by Heroes Village, a for-profit group, according to Sean Richardson, co-founder.  He said it hasn’t yet been decided whether it will accommodate women with children. “The architect is trying to figure out a way to configure the space so children can be housed there as well,” said Richardson, of the site which is a former VFW Post.

Schwartz said the VA is transitioning from focusing mainly on homeless single men to also serving more women and families.  “People in the business of providing for the homeless have known for a long time that women veterans with children are an underserved population,” she said.

“The difference is, there are many more of them than there were in the past, and it is growing every day.”

The Mirandas, who both served on U.S. bases, are among those new faces of homeless veterans.  Their most recent jobs were as substitute teachers. They travel by foot, bus, train or bike to advocate for their son, who has Asperger’s syndrome, at his school, volunteer at the VA hospital, attend support programs—and in Andy’s case, to take paralegal and other courses.  Miriam, 46, was an Army nurse from 1990 to 1993 and would love to get a paying job at the VA. Their apartment is subsidized by the federal HUD-VASH program, established in 2009 to get homeless veterans into housing and provide counseling from the VA.

Maynard said 315 HUD-VASH rental vouchers have been awarded to Connecticut veterans so far, and an additional 75 were recently issued to the state.  The SSVF program, which started last fall, provides subsidies to low-income veterans for expenses such as rent and utilities, assists them in obtaining benefits from the VA and other programs, and provides case management to help families attain housing stability.  It also helps family members of veterans, including those widowed or divorced.

The VA has contracted with 85 social service agencies throughout the country to run the SSVF program, including CRT in Hartford and Veterans Inc. in Worcester, Mass., which works with Friendship Service Center in New Britain and other agencies throughout New England.

Kimberley Wilson, an SSVF case worker at the Friendship Center, said the agency already has seen high demand. While her agency’s goal is to assist 90 veterans in the first year, she said case workers already had seen more than three-dozen people just two months into the program. In December, the VA announced it was adding another $100 million in grants to the original $60 million allocated to the SSVF program nationwide.  New Haven, Hamden, West Haven, North Haven, Meriden and Waterbury are among the communities served by the Friendship Center.

Advocates say foreclosures remain a key threat to veterans’ housing security. The U.S. House of Representatives passed a bill which would extend foreclosure protections for spouses of military members who die while serving, but the Senate has not yet acted on it.

Both the Veterans Legal Center and the state attorney general’s office have assisted veterans faced with foreclosure. Schwartz herself administers a small emergency fund, financed by private donations, which she uses to help veterans pay rent or buy food.

While housing security is a larger problem in Connecticut, Wilson and other advocates say it is especially compelling for veterans, some who have served multiple tours in Iraq and Afghanistan.

“I don’t think veterans who sacrifice for us should come home and be homeless,” she said.