The Congressional Oversight Panel issued a report Monday declaring the administration's Home Affordable Modification Program a failure.
In the 176-page report, the panel said the major obstacles of Hamp were its voluntary nature and problems dealing with second liens. It also criticized the Treasury Department for a failure to analyze Hamp data, acknowledge its shortcomings or hold loan servicers accountable for errors. "In some regards, the program's failure to make a dent in the foreclosure crisis may seem surprising. … Yet despite the apparent strength of Hamp's economic logic, the program has failed to help the vast majority of homeowners facing foreclosure," the report said.
The Treasury first estimated that Hamp would prevent 3 million to 4 million foreclosures. But so far Hamp has resulted in only 483,342 permanent modifications and the panel estimated that Hamp will ultimately prevent only 700,000 to 800,000. The panel faulted the Treasury for not acknowledging the shortcomings of Hamp and making changes before its funding source, the Troubled Asset Relief Program, expired.
"Treasury's reluctance to acknowledge Hamp's shortcomings has real consequences," the report said. "Absent a dramatic and unexpected increase in Hamp enrollment, many billions of dollars set aside for foreclosure mitigation may well be left unused. … As a result, an untold number of borrowers may go without help — all because Treasury failed to acknowledge Hamp's shortcomings in time."