GAO Confirms HAMP is Hopeless

Recall when we said HAMP is a scam? A new GAO report confirms that conclusion (well not so dramatic but the statistics are the same!)

When Treasury announced the program in March 2009, it estimated that HAMP could help 3 to 4 million borrowers. Through February 2010, including both the portion funded by TARP and the portion funded by Fannie Mae and Freddie Mac:
  1. about 1.1 million borrowers had begun trial modifications
  2. about 800,000 were in active trial modifications
  3. fewer than 200,000 permanent modifications had been made

As of early March 2010, the TARP-funded portion of the program had 113 participating servicers, and about $36.9 billion of the $50 billion in TARP funds for HAMP had been allocated to these servicers. A typical TARP-funded modification could result in a monthly mortgage payment reduction of about $520.

Treasury has taken some steps, but has not fully addressed concerns that GAO raised in its July 2009 report on HAMP's transparency and accountability. For example, Treasury has yet to finalize some key components of its internal controls over the first-lien program, including establishing metrics and benchmarks for servicers' performance. In addition, Treasury has not finalized remedial actions, or penalties, for servicers not in compliance with HAMP guidelines. According to Treasury, these remedies will be completed in April 2010.

Lastly, GAO reported that Treasury's projection that 3 to 4 million borrowers could be helped by HAMP was based on several uncertain assumptions and might be overly optimistic, and GAO recommended that Treasury update this estimate, but the Department has not yet done so.

Preliminary results of GAO's ongoing work show inconsistencies in some aspects of program implementation. Although one of HAMP's goals was to ensure that mortgage modifications were standardized, Treasury has not issued specific guidelines for all program areas, allowing inconsistencies in how servicers treat borrowers. For example, the 10 servicers GAO contacted had 7 different sets of criteria for determining whether borrowers who were not yet 60 days delinquent qualified for HAMP. Also, some servicers were not systematically tracking all HAMP complaints and, in some cases, tracked only resolutions to certain types of complaints, such as written complaints addressed to the company president.

GAO also found that servicers faced challenges implementing HAMP because of the number of changes to the program, some of which have required servicers to readjust their business practices, update their systems, and retrain staff.

HAMP is likely to face additional challenges going forward, including successfully converting trial modifications, addressing the needs of borrowers who have substantial negative equity, limiting redefaults for those who receive modifications, and achieving program stability.

While GAO's study is not yet completed, GAO shared preliminary findings with Treasury to allow it to address these issues in a timely manner.


Supposedly there will be yet another plan announced Friday, but how many people have lost their home in this time?

2006 - 1.2 million
2007 - 2.2 million
2008 - 2.3 million
2009 - 2.8 million
2010 - at least 3 million estimated

The details of the new plan sound like principle reduction according to the article above.

The plan will let people who owe more on their mortgages than their properties are worth get new loans backed by the Federal Housing Administration, people briefed on the plan said. It would be funded by $14 billion from the administration's existing $75 billion foreclosure-prevention program.

The people briefed on the plan declined to be identified because the program had not yet been announced.

The plan also will require the more than 100 mortgage companies participating in the administration's program to consider slashing the amount borrowers owe. They will get incentive payments if they do so. The plan also is expected to include at least three months of temporary aid for borrowers who have lost their jobs.

I just watched a news report about people committing suicide before being evicted after being foreclosed on. I will not link to the video because a group of sheriffs tried to claim there is help available. Cough, first up folks, people need a good paying job. It is completely insulting to see a video report trying to dismiss desperation and fail to recognize people have no where to turn.

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