Our leaders made a lot of noise when the Housing Assistance Modification Program (HAMP) was announced. HAMP was going to help 3-4 million homeowners; it has a $50 billion budget to encourage mortgage servicers to modify loans. The results so far have been pretty bad. Less than 800,000 homeowners have had their loans modified. Only $1.6 billion of the $50 billion has been paid out. And HAMP was launched more than two years ago.
Not only have many homeowners not been helped, but there has been very little concern as to whether the mortgage servicers were following HAMP's rules. It took more than eight months to conduct the first audit of a servicer. The audit found that the servicer, GMAC, had miscalculated homeowner income in 80% of the audited cases. The penalty to GMAC - nada. This miscalculation of income seems to have been fairly common among the servicers.
Apparently, the auditors were quite naive or too friendly with GMAC as they approved cases where HAMP's rules were violated by GMAC. Probably inadequate auditing should have been expected as Freddie Mac was the auditor. Clearly, the Treasury has something to hide about this program since they are making it very difficult for ProPublica to get access to the audits of other servicers.
Here's what Neil Barofsky, the former special inspector general for the Troubled Asset Relief Program, better known as TARP or the bank bailout, which provided the money for HAMP, said, “For two years, they’ve known how abysmal servicers were performing, and decided to do nothing. It demonstrates that if you have a set of rules for which compliance is completely voluntary and no meaningful consequences for those who violate them, having all the audits and reviews in the world are not going to make a bit of difference. It’s why the program has been a colossal failure.”
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