The Miami Herald is reporting that the Treasury Department's foreclosure prevention program has failed to live up to expectations -- helping just 20 percent of the anticipated number of homeowners.
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The government's Home Affordable Modification Program, or HAMP, could prevent as many as 800,000 foreclosures, a pace that would help far fewer than the 4 million struggling homeowners the government had hoped would benefit.
"This has turned out to be a lot more complicated and a lot harder," than expected, said the panel's chairman, Sen. Ted Kaufman (D-Delaware). "I think the program has just turned out to be smaller and has had a lot less impact" than anticipated.
The panel cites conflicting incentives within the mortgage industry. For instance, some companies that service the loans stand to make more through foreclosures and through modifying existing mortgages. The Treasury was also unsuccessful in encouraging adequate participation because mortgage companies were not required to participate in the program.
In other cases, a homeowner may have held a second mortgage, which gave some lenders incentive to block the modification of a first mortgage.
The Treasury was also criticized for not collecting more meaningful data about the program, not setting meaningful goals by which to measure progress or success and for failing to hold mortgage companies accountable. Many companies repeatedly lost paperwork or resisted participating in mortgage modification.
"An untold number of borrowers may go without help - all because Treasury failed to acknowledge HAMP's shortcomings in time." the panel concluded.
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