U.S. Treasury Secretary Defends Beleaguered HAMP
Among the many things that Republican congressmen and women have thrown on the chopping block in their efforts to bring down the national budget and get a handle on the national debt is the Obama administration’s much-maligned Home Affordable Modification Program (HAMP). The program was intended to help “as many as three to four million financially struggling homeowners avoid foreclosure by modifying loans,”[1] but in reality the program has led to only 521,630 permanent loan modifications, with many of these “permanent” modifications lapsing back into default[2]. Despite all this, however, U.S. Treasury Secretary Timothy Geithner came out swinging today in HAMP’s defense, saying that ending the program would “cause a huge amount of damage” and “I would recommend against it”[3].
Geithner also recently warned against “scaling back the federal role [in the housing market] too far”[4]. He claimed that it would make housing more costly and leave taxpayers “on the hook” for losses while handcuffing policymakers, adding that “you would leave the [U.S. government] with a more limited set of tools to protect the economy and innocent victims in the face of the next severe recession,” he said.
It sounds like Geithner does not have any real plans to exit this down economy. He’s already planning for the next disaster. Do you think that this is a good way to approach the housing market in general and the role of the federal government in the housing market in particular?
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Let us know what you think of Secretary Geithner’s comments below.
[1] https://www.hmpadmin.com/portal/programs/hamp.jsp
[2] http://www.politico.com/news/stories/0211/50130.html
[3] http://www.reuters.com/article/2011/03/01/usa-housing-geithner-hamp-idUSWEN874220110301
[4] http://www.washingtonpost.com/wp-dyn/content/article/2011/03/01/AR2011030103946.html
One big reason HAMP has failed is that it is not mandatory. Banks are permitted to substitute their own programs, some of which are a joke! For example, I helped a client yesterday apply for a loan modification, he was only a few months behind and had enough income to pay a modified payment. It took five minutes to get pre-approval from his servicer for a reduce interst rate and payment. Everything is in the works less than 24 hours later. Another person I know has been working with Wells Fargo for over a year to try to modify their mortgage and still gotten nothing but harassing phoen calls, lost paperwork and threats of throwing them into the streets.
What’s needed is an independent agency to process and monitor these loan modifications. The program needs to be mandatory. The banks are giving nothing but lip service to HAMP and THAT is why it has failed!
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