The Congressional Oversight Panel released a report on Tuesday claiming the Treasury Department's new mortgage efforts are too late to have a meaningful impact.
In the report on the Treasury's Home Affordable Modification Program, the oversight panel's chairman, Elizabeth Warren, wrote that the housing efforts will not have a sustainable effect and still lack accountability.
"Treasury's programs are not keeping pace with the foreclosure crisis," according to the report. "Treasury is still struggling to get its foreclosure programs off the ground as the crisis continues unabated."
Last month, the Treasury announced it was shifting the emphasis of Hamp from interest rate reduction to principal reduction, to address underwater borrowers. It also announced forbearance assistance to unemployed borrowers. But these changes will not be implemented until the fall. The oversight panel said even if these latest changes succeed, their impact will not be felt until early 2011 — almost two years after Hamp was launched.
While commending the new approach, the panel reported that the pattern of incentives might backfire as lenders and servicers delay modifications in hopes of a better deal. Also, these constant changes have resulted in servicer confusion, making implementation more complex.
On Wednesday, a House Financial Services subcommittee will hold a hearing on Hamp and the Treasury will release its latest progress numbers.