Under the Obama Administration’s Recovery Plan, the Treasury would provide lenders with substantial incentives to help keep families in their homes. The Treasury agreed to pay lenders a share of each borrower’s mortgage reduction; additionally, lenders are eligible to receive $1000 for each mortgage they agreed to modify. If that weren’t enough, banks are able to receive an additional $1000 per mortgage every year for up to 3 years. Apparently, these incentives don’t seem to be enough for lenders. The New York Times reported 3 separate incidents in which homeowners who were trying to modify their mortgage payments were met with insurmountable obstacles and incompetence from their lenders. Granted, errors in the loan modification process came from both sides. Banks repeatedly “lost” paperwork, even while confirming they had received the documents a few weeks earlier. In some cases, homeowners had failed to submit all necessary paperwork, or were unaware of the bank’s policies after renegotiating their mortgages. Still, given the large governmental incentives, banks have absolutely no reason to deny their customers workable solutions. Allowing clients to temporarily decrease their mortgage payments instead of repossessing homes or forcing bankruptcies seems more profitable for banks in the long run. So why are banks shooting themselves in the foot? Lenders claim that they aren’t; the program is still in its infancy, so their new hires aren’t well trained, and problems are more apt to occur. Additionally, they insist that the sheer volume of paperwork makes tracking individual claims difficult. I’m still skeptical—even if these problems exist, they shouldn’t create bureaucratic black holes that make it impossible for individuals to obtain any sort of financial respite.

Regardless of what the problem is, one thing is clear: people of color are disproportionately affected by the housing crisis. Any solution needs to reflect the racial discrepancies in lending policies that caused the crisis. The Obama administration’s solution needs to be implemented more effectively and more quickly. People of color were the first to be affected in the housing crisis, and were affected most severely. Aid needs to first go to communities of color, where it is needed most. To do this, the bureaucratic process needs to be simplified, more advocates need to be available for people of color, and outreach efforts need to increase significantly. Banks need to keep up their end of the bargain, and work effectively with the government to fix the mess that they’ve created.