Anti-Foreclosure Program Shows Participation Gains

Foreclosure-Prevention Program Shows Gains Amid Criticism
HAMP has failed to reach the Obama administration’s goal of helping 3 million to 4 million homeowners avoid foreclosure. Photographer: Jacob Kepler/Bloomberg

More than 30,000 homeowners permanently lowered their mortgage payments last month as participation in the government’s anti-foreclosure program accelerated, the U.S. Treasury Department reported.

Borrowers aided by the Home Affordable Modification Program grew to 579,650 in December, 5.5 percent more than a month earlier. Participation had grown 4.5 percent in November.

Troubled borrowers continue to fail out of the program at a faster rate than they join. A total of 58,020 loan modifications have been canceled, a nearly 30 percent increase from the 44,972 reported in November, the Treasury report said.

Treasury released a partial scorecard on HAMP in advance of a scheduled Feb. 1 report as criticism of the effort mounts. Representative Jim Jordan, an Ohio Republican, said today that he and Representative Patrick McHenry, a North Carolina Republican, have introduced a bill to end the program.

“At some point we’ve gotta say enough is enough, we’ve gotta end this program,” Jordan said. He made his comments during a House Oversight and Government Reform Committee hearing about the $700 billion Troubled Asset Relief Program, or TARP, which funds the mortgage modification effort.

Short of Goal

HAMP has failed to reach President Barack Obama’s goal of helping 3 million to 4 million homeowners avoid foreclosure. It has been criticized by housing advocates, lawmakers and watchdog groups, including Neil Barofsky, special inspector general for TARP.

In a report yesterday, Barofsky called the program “anemic” and “remarkably discouraging” as permanent loan modifications “pale in comparison” to foreclosure filings, which reached 2.9 million in 2010, according to RealtyTrac Inc., an Irvine, California data company.

“HAMP appears to be under siege, with a chorus of criticisms from all points on the ideological spectrum growing more insistent and calls for termination or dramatic restructuring gaining traction,” Barofsky said in the report.

“I share your frustration,” he said during today’s hearing in response to comments by Jordan. “I just hope Treasury can hear what you’re saying,” he said, “and be honest about where this program is going if it’s going anywhere.”

Administration officials have said the foreclosure efforts are turning a corner after changes in paperwork requirements and expanded participation by lenders.

Acting Assistant Treasury Secretary Timothy Massad also testified at the oversight hearing today.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE