The White House has now tapped $14 billion in TARP funds to expand the administration's existing mortgage assistance program.
Matt Lauer introduced the "Today" show March 29 discussion of the program saying: "New help for millions of homeowners who are facing foreclosure. The Obama administration is rolling out new incentives to the federal mortgage relief program - so what's different this time?"
"If you're unemployed, this is going to give you an ability to have your monthly payments lowered for three months, maybe even six months," CNBC's Sharon Epperson told Lauer, before noting the requirements and assistance for those "underwater."
Lauer asked if interest or principal reductions were in the mix for homeowners.
"This is the principal - this is what's different about this program. We're talking about principal reduction - that's significant and a number of lenders have already come out with their own programs from this beyond what the federal government has done," Epperson replied.
"What is the incentive to the lender though?" Lauer asked.
"They're going to get a subsidy, this time they get a financial incentive," Epperson answered. "This time they're going to get a subsidy on the dollar that they're able to reduce your principal by. So that is one reason why they might want to do it now."
Epperson said that the government's goal was to prevent three million to four million foreclosures. But Lauer and Epperson only briefly alluded to the failure of the initial program. Lauer stopped short of criticizing the Obama administration saying only that it was their "second attempt at this."
Ronald D. Orol of MarketWatch pointed out some of the problems with the first program on March 26. That program, Fannie Mae and Freddie Mac's Home Affordable Refinance Program (HARP), "has converted fewer than 200,000 temporarily modified home loans into permanent modifications - well below the goal of helping 3 million to 4 million struggling homeowners avoid foreclosure by the end of 2012." (Emphasis added)
According to the Wall Street Journal, HARP has been criticized for lengthy delays, high fees, and reluctant banks. Ultimately, WSJ's Nick Timiraos reported that only "around 2,000 borrowers who owed more than 105% of their home's value had refinanced under that program last year."
Epperson expressed some doubt about the plan on the basis that lenders do not have to participate, but did not suggest any free-market solutions to home foreclosures.