Mortgage Modification Program's Definition of Success Called 'Essentially Meaningless'

WASHINGTON, March 23, 2010— -- The Obama administration's program to help struggling homeowners avoid foreclosure has posted "disappointing results" in part because its definition of success is "essentially meaningless," a watchdog said today in a new report obtained by ABC News.

In his audit on the administration's $75 billion Home Affordable Modification Program (HAMP), bailout watchdog Neil Barofsky blasted the Treasury Department for he said were the shortcomings of the program.

Specifically, Barofsky criticized the administration for focusing on the number of homeowners who receive temporary help.

When the program was unveiled last year, the administration said by the end of 2012 it would help 3 million to 4 million homeowners "avoid foreclosure" by "reducing monthly payments to sustainable levels." Treasury has stated that homeowners who have received offers for temporary mortgage modifications count towards this goal, a decision ripped by Barofsky.

"Defining success by how many offers are given can reasonably be received as essentially meaningless," Barofsky said in his report. "It is simply not a useful measure."

Under the program, Treasury provides incentives for banks to modify the mortgages of struggling homeowners. After an offer for a trial loan modification is extended to a borrower, the borrower can then move towards a permanent mortgage modification by continuing to make payments for three months.

To date, more than 1.3 million homeowners have received trial modification offers, but only 170,000 homeowners have received permanent modifications.