The Obama administration's loan-modification campaign is ill-suited to addressing the evolving causes of the foreclosure crisis, financial rescue watchdogs have concluded in a report.
The foreclosure crisis has shifted from being driven by subprime mortgages to defaults on prime mortgages, many of them caused by job losses, two of the three members of the Troubled Asset Relief Program's Congressional Oversight Panel concluded last week.
The administration's Home Affordable Modification Program, or HAMP, was not designed to address these problems, however, they wrote, nor is it geared toward averting a looming wave of foreclosures caused by the resetting of option adjustable-rate mortgages.
"It increasingly appears that HAMP is targeted at the housing crisis as it existed six months ago, rather than as it exists right now," said the Friday report.
Rep. Jeb Hensarling, R-Tex., the lone lawmaker on the panel, dissented from the report's findings on grounds that it implies more taxpayer funds should be devoted to helping distressed homeowners. He called HAMP a failure, saying it has "assisted only a small number of homeowners."