TARP Has Failed Homeowners

Since TARP was authorized in October 2008, more than 7 million homeowners have received foreclosure notices and more than 11 milliion homeowners are underwater on their mortgages.  Home values have dropped 28% and we have 14.9 million unemployed.  Mortgages are increasingly more difficult to obtain with new underwriting rules requiring higher FICO scores, more money down, and making it difficult for self-employed people to qualify.

As real estate professionals we should take the time to skim through this 338 page report by the Officer of the Special Inspector General for TARP rather than rely on the glowing reports from the Treasury Department.  This report shows that of the 46.6 billion dollars allocated to the HAMP program, only .6 billion dollars has been spent.  That's only 1.3% of the total allocated.

HAMP encourages loan servicers and investors to modify mortgages through incentives.  There is no requirement for the lenders who accepted TARP funds to modify a certain number or dollar amount of loans. 

My question is why don't the lenders modify more mortgages given the incentives in TARP?  Is there more to be gained by foreclosing on homes than modifying mortgages?  There must be a reason that goes beyond ineptitude on the part of lenders.  What do you think the reason is?