COMMENTARY | President Barack Obama instituted the Home Affordable Modification Program (HAMP) to counteract the subprime mortgage crisis. The GOP is quick to point out that the program failed to reach its stated goal of averting the foreclosures of "3 to 4 million American homeowners." Asserting that HAMP only benefited 753,000 homeowners as of July 2010, the administration counters that approximately 1.5 million homeowners have begun the trial modification aspect of the program.
It bears pointing out that there is a world of difference between seeing through the foreclosure prevention process from start to finish and merely starting a trial modification. The Associated Press reveals that even HAMP-friendly Democrats -- most notably California Rep. Maxine Waters -- count only 600,000 successfully completed modifications. Seeing the opportunity to do away with an under-performing program they claim wastes taxpayer funds, House Republicans voted 252 to 170 to terminate HAMP.
"If we can't eliminate this failed program, what program can we eliminate," asks N.C. Rep. Patrick McHenry. It is clear that the GOP is working hard to reign in a government that it believes to be on a spending spree. The only problem with canceling HAMP is the lack of another program. Mass. Rep. Barney Frank counters the GOP's stroke of the red pen with the opinion that "the absence of any program leaves people worse off."
Venting in a New York Times editorial, Neil Barofsky -- TARP's former Special Inspector General -- points to the endemic unwillingness of lenders to support the program. The number of permanent modifications that Barofsky reveals -- 540,000 -- is a far cry from the 1.5 million the administration likes to point to. In fact, the expert asserts that there is the dark cipher of more than 800,000 modifications that failed.
Interestingly enough, it is neither the fault of the administration nor the GOP that HAMP is a flop. Rather, the responsibility squarely falls on the shoulders of the Treasury Department that bailed out the banks but failed to attach any strings to the loans. Much like the verbal agreement between two parties, which isn't worth the paper it isn't printed on, that stipulate how funds ought to be used in the future, banks conceded that once back in business, they could get back to lending money. The opposite is the case. Banks are now tight-fisted and drag their feet on home loan modifications as well as short sales.
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