HAMP Program will Fall Short of Helping People

The Obama administration’s signature foreclosure prevention
program will help only 700,000 Americans save their homes,
according to a scathing report released Tuesday by the
Congressional Oversight Panel (COP).

The group’s assessment falls far short of the 3 to 4 million
homeowners that the president pledged would receive more
sustainable mortgage loans when the Home Affordable
Modification Program (HAMP) was launched in March of last
year, and is well below the 8 to 13 million foreclosures COP
says are expected by 2012.

Treasury initially committed $75 billion of Troubled Asset
Relief Program (TARP) funds to the HAMP initiative, which
pays incentives to servicers, investors, and homeowners for
each loan that is successfully modified. COP, which is
charged with overseeing the use of TARP money, says it now
appears Treasury will spend only $4 billion on HAMP
incentives.

“Absent a dramatic and unexpected increase in HAMP
enrollment, many billions of dollars set aside for
foreclosure mitigation may well be left unused. As a result,
an untold number of borrowers may go without help,” the
report said.

The members of the congressionally appointed panel went so
far as to call the government’s loan modification program
“ineffective,” and they said Treasury’s reluctance to
acknowledge HAMP’s shortcomings has had “real
consequences.”

Since COP’s last report on HAMP eight months ago, the panel
noted that Treasury has made “minor tweaks” to the program,
but COP says the changes have not resolved its core
concerns.

Treasury’s authority to restructure HAMP ended on October 3,
when TARP expired, and COP says because the deadline has
come and gone for any major overhaul, “the program’s
prospects are unlikely to improve substantially in the
future.”

“Many of the problems now plaguing HAMP are inherent in its
design and cannot be resolved at this late date,” the panel
said in its latest report. “Other problems, however, can
still be mitigated.”

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