From Neil Barofsky, the special inspector general for the Troubled Asset Relief Program by way of Bloomberg:
“[HAMP] risks helping few, and for the rest, merely spreading out the foreclosure crisis over the course of several years” at significant expense for taxpayers and borrowers, Barofsky’s (sic) wrote. If too many participants re-default, the modification plan “will have done little to achieve the goal of assisting homeowners who would still find themselves losing their homes.”
HAMP has resulted in 168,708 permanent loan modifications as of February 28 (1,473 of which have already re-defaulted). For perspective, “[a]bout 2.82 million U.S. homeowners lost their properties to foreclosure in 2009 and 4.5 million filings are expected in 2010.”
UPDATE: The Treasury’s response.
∙ Treasury’s Allison Defends Obama Mortgage-Modification Program [Bloomberg]
∙ Insight Into The Inevitable Once Again? [SocketSite]
∙ Testimony of Herbert M. Allison, Assistant Secretary for Financial Stability [treas.gov]
That blurb, from the same House address, by the same guy, is framed entirely differently than the way the Chron framed it here: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/03/25/financial/f063429D63.DTL
The Chron framed it like a lot of people in the industry view it. A big mess initially, changed, changed again, and now changed again as of yesterday. And I’m sorry but “spreading out the foreclosure crisis over the course of several years” is probably something they want to do.
It remains to be seen whether one standard system can actually be somewhat effective. They keep tweaking things. One thing is certain, tho, and that’s as long as there is monetary incentives for banks to try something, they’ll do it. It’d probably be nice, from the banks’ perspective, if they knew how to set up their loan mod wings in a way that wouldn’t need to be changed in three months.
That was my initial response, isn’t “spreading out the foreclosure crisis over the course of several years” been what many of us here have thought the objective (for good or bad) of the government was all along?
“spreading the foreclosure crisis ouver the course of several years” is of great benefit for the current generation of property owners and mortgage holders. For the next generation, who will have the obligation to pay the bills and will receive ever-diminishing public services in return, not so much.
Well that’s what the next generation gets for voting in disproportionately low numbers.
Those apathetic 12 year olds have no one but themselves to blame.
Although I’m sure there will be some foreclosures down the road for program participants, don’t forget that by most accounts the vast majority of permanent loan mods have gone to people who really don’t need them. Many people have likely strategically hidden income to get substantially reduced mortgage loan interest rates.
“Those apathetic 12 year olds have no one but themselves to blame.”
Yeah, they should have gotten the ACORN workers to register them! Now its too late for them. 🙂
Incidentally, the SIGTARP report (which sounds like a Unix thing) is what I pulled some data from yesterday (e.g. significant amounts people are in debt, Treasury expecting 40% re-defaults, etc.):
https://socketsite.com/archives/2010/03/bank_of_america_expands_principal_forgiveness_program.html#c458729
HAMP is largely political. There was immense pressure to Do Something. This is extremely awkward because there really isn’t anything that can be done. HAMP represents a balance between the need to Do Something and the unfortunate fact that little can be done.
Did anyone check out Mark Hanson’s latest post (last week), btw?
http://mhanson.com/archives/477
It’s an interesting read. He has some interesting CA-wide data on inventory, sales, and pent up supply.