Watchdog Says Mortgage Modification Program Failed

Neil Barofsky, who was appointed special inspector general for bank bailouts, recently spoke before Congress and did not mince words when addressing the Home Affordable Modification Program’s lack of success, according to a report from USA Today. He called it a “failure” with a record for helping consumers that “has been nothing short of abysmal.”

Barofsky noted that the program has so far fallen well short of its goal to help between 3 million and 4 million homeowners renegotiate their home loans when their property’s value slipped below the amount remaining on their mortgage, the report said. To date, HAMP has only started 549,620 permanent modifications, and will likely never reach its intended mark.

[Infographic: Why the Home Loan Mod Program is Failing]

However, the Treasury Department, which is running the program, said HAMP can still be salvaged if it is given the proper powers by lawmakers.

“I agree that the servicer performance has been abysmal and that’s something that we have been trying to fix,” Timothy Massad, the Treasury official in charge of bank bailouts, told Congress, according to the newspaper. “Let me first make it clear, this is a voluntary program. Congress didn’t give us the tools to impose fines.”

HAMP has come under fire from some as being too difficult to qualify for, and not necessarily meeting the needs of those whose loans it is able to modify. Many of those who have begun the process of altering their mortgage agreements have since defaulted again.