When the administration rolled out the Home Affordable Modification Program over a year ago, President Obama vowed that it would help three to four million homeowners. To date the program has only helped 168,000 homeowners obtain permanent mortgage modifications. However, the administration has said that the number of homeowners offered trial modifications – 1.3 million – counts as homeowners receiving help.
Earlier this week bailout watchdog Neil Barofsky blasted that statistic as "essentially meaningless."
"Defining success by how many offers are given can reasonably be received as essentially meaningless," Barofsky said in an audit delivered to Congress. "It is simply not a useful measure."
At a House Oversight Committee hearing Thursday, both Democrats and Republicans criticized the program.
Rep. Jim Jordan, a Republican from Ohio, called the program "a total mess."
"The problem of foreclosures has not been solved," Jordan said, "and in many ways it's worse than ever."
Rep. Elijah Cummings, a Democrat from Maryland, stated, "The question is not whether we will get through the storm. The question is, who will be living in your house after the storm is over?"
As part of the new changes, lenders will now also receive twice as much money in federal incentives to modify second mortgages, including piggyback mortgages.
The new plans will go into effect over the next six months. The money for the plans will be drawn from the $700 billion Troubled Asset Relief Program, so no new funds will be required.