Federal mortgage bailout program a flop: watchdog
WASHINGTON — The US government’s program to help millions of foreclosure-threatened Americans keep their homes amid the economic crisis has largely failed, a government auditor said in a report released Tuesday.
Designed to aid homeowners reschedule mortgages rather than cede their homes to banks, the $29-billion operation “continues to fall dramatically short of any meaningful standard of success,” said the inspector general of the government’s Troubled Assets Relief Program.
The Home Affordable Modification Program, or HAMP, was a key facet of the government’s $700 billion economic bailout operation for the financial sector and key industries as well as homeowners.
“TARP’s failure to realize its most specific Main Street goal, ‘preserving home ownership’… has had perhaps the most devastating consequences,” said the auditor’s report.
The report blamed the HAMP’s poor design and administration for not getting to the problems it was designed for.
“The numbers are remarkably discouraging,” it said, citing the record 2.9 million homes hit with foreclosure papers in 2010, compared to 2.8 million the year before.
Problem loans on only 238,000 homes have been “modified”, or rescheduled under TARP.
Just 18,000 home loans were modified in the last quarter of 2010, 35 percent fewer than the previous quarter, the report said.
The report contrasted the failure of HAMP to reach its goals with the success of the TARP bailouts of “rebounding wall Street financial institutions” — which have been heavily criticized by many Americans as coddling undeserving bankers.
The report criticized the US Treasury’s “astonishing silence” on how it would address HAMP’s problems.
“HAMP’s achievements look remarkably modest, and hope that this program can ever meet its original expectations is slipping away,” it said.