The report, released by two GOP lawmakers on the House Committee on Oversight and Government Reform, asserts that the Home Affordable Modification Program (HAMP) is harming the country's economic recovery.
"By every empirical measure, HAMP has failed," concluded Rep. Darrell Issa, R-Calif., and Rep. Jim Jordan, R-Ohio., citing a record number of homeowners in foreclosure.
The administration's program provides incentives for mortgage companies to modify the loans of qualifying borrowers. When the administration unveiled the program last March, officials said the plan would help 3 to 4 million homeowners avoid foreclosure.
As of the end of January, the Treasury Department said 116,000 borrowers had received permanent loan modifications. While over a million homeowners in all have started trial modifications – saving more than $500 a month, critics have honed in on the low number of permanent modifications as evidence that the program has not succeeded.
According to data released by the Mortgage Bankers Association, a record 15 percent of American mortgage holders are either in foreclosure or at least one payment behind. In the past year, the number of seriously delinquent mortgage owners has soared.
Issa and Jordan said homeowners that failed to secure permanent modifications would be in a better position today if they had not participated in the administration's plan.
"Treasury's own data suggests that hundreds of thousands of homeowners would receive temporary modifications but fail to qualify for permanent ones, thus ultimately leading to default," the lawmakers argued. "These homeowners would have been better off if they had defaulted earlier and spent the payments on more affordable housing options."
Therefore, the GOP congressmen said, the housing plan is damaging the country's overall economic recovery.
"HAMP both hurts homeowners who might otherwise spend their trial period mortgage payments on rent and also distorts the housing market, delaying any recovery," said Issa and Jordan.
Issa is the top Republican on the House panel, while Jordan is the ranking Republican on the Domestic Policy subcommittee. The lawmakers accused Treasury of attempting to conceal the program's shortcomings.
"Treasury is being dishonest and disingenuous in characterizing the results of this failed policy by hiding reporting numbers, releasing misleading statements, and failing to turn over information and documents," Issa said in a statement. "The Obama Administration and the Department of Treasury are wasting billions of taxpayer dollars without helping the vast majority of struggling homeowners who seek help."
"Many Americans," said Jordan, "are throwing their money away through a government program that's supposed to help them, but is only leaving them in a bigger financial hole."
Treasury officials could not be reached for comment on the report. In recent briefings on the program, administration officials have said the program is succeeding in its efforts.
Phyllis Caldwell, head of Treasury's Homeownership Preservation Office, said the most recent data released at the end of January showed that the program "is doing the job it was designed to do" and remains "on pace to meet" the goal of helping 3 to 4 million homeowners by the end of 2012.
A key stumbling block for the program has been getting mortgage servicers to increase the rate of conversions from trial modifications to permanent ones.
As of the end of last month Bank of America had only finalized 12,761 permanent modifications out of a total of more than one million eligible borrowers. Wachovia Mortgage has made 330 permanent modifications out of 86,461 eligible homeowners.
The administration late last year launched a mortgage conversion drive to increase the performance of servicers.
Criticism of the housing plan has not only come from Republicans, but from Democrats, too.
At a December hearing in Washington, lawmakers on the House Financial Services committee blasted the program.
"We're very unhappy," said Rep. Maxine Waters, D-Calif.. "Our constituents are in pain. Our communities are at great risk. Treasury, you're just too slow. You talk about all the things that you're going to do, how you're going to improve. We've been listening too long."
The panel's chairman, Rep. Barney Frank, D-Mass., said he felt "a great frustration" with the government's efforts to stem the foreclosure crisis.
"No one should think we are doing a satisfactory job," he said.
Rep. Emanuel Cleaver, D-Missouri, urged Treasury to crack down on under-performing mortgage companies.
"We haven't spanked anybody so I think they've come to the conclusion that spankings are not on the agenda," Cleaver said.