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SIGTARP: HAMP Fails to Preserve Homeownership, Offers “False Hope”

By
Mortgage and Lending with Total Mortgage Services

This morning, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) released its quarterly report to congress.  The report is incredibly blunt and candid about the failures of TARP (which are myriad).  Neil Barofsky, the inspector general, blasted TARP for being opaque, misleading, and lacking goals, among other things.  There was a lot to say (the report runs 338 pages), but I would like to focus on what SIGTARP had to say about the Home Affordable Modification Program (HAMP).  If you have time, though, I highly recommend reading through the report.  The allegations about TARP and AIG are particularly damning.

Lets start with this choice quote:

“The most specific of TARP’s Main Street goals, “preserving homeownership,” has so far fallen woefully short, with TARP’s portion of the Administration’s mortgage modification program yielding only 207,000 (out of a total of 467,000) ongoing permanent modifications since TARP’s inception, a number that stands in stark contrast to the 5.5 million homes receiving foreclosure filings and more than 1.7 million homes that have been lost to foreclosure since January 2009.”

SIGTARP does not mince words.  Here’s another good one:

 

“SIGTARP, along with the other TARP oversight bodies (GAO and the Congressional Oversight Panel), has long argued that Treasury should adopt meaningful benchmarks and goals for HAMP – permanent modifications that offer secure, sustainable relief to the program’s intended beneficiaries.  Remarkably, Treasury has steadfastly rejected these recommendations, and now finds itself defending a program that is failing to meet TARP’s goal of “perserving homeownership”.  As a result, a program that began with much promise must be counted among those that risk generating public anger and mistrust.”

That the Treasury Department would fail to heed SIGTARP’s recommendation that they set actual transparent goals in order to judge the success of the program tells you pretty much everything you need to know.

The report rails on the failures of HAMP for pages.  They detail the hurdles and roadblocks that face borrowers who attempt to participate in HAMP, many of whom fail to get a permanent loan modification and find themselves worse off then when they started the HAMP process (see the section beginning on page 155 of the linked pdf).  Here’s a quote that describes the process:

“What Treasury deems a universal benefit, many homeowners, members of Congress, and a growing number of commentators describe as “cruel” and offering little more than “false hope”.

Wow.  There’s not a lot else to say here.  Do you have any comments about this report or your HAMP experiences?  Let us know in the comments section.

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