Watchdog Group: Obama's Mortgage Aid Plan Wastes Billions
Government watchdog group says plan delays instead of preventing foreclosures.
April 14, 2010— -- The Obama administration's embattled mortgage aid plan is coming under fresh criticism from a government watchdog who says the program is wasting billions of taxpayer dollars simply to delay -- rather than prevent -- foreclosures.
In the last year, the Treasury Department's $75 billion Home Affordable Modification Program (HAMP) has been blasted by Democrats, Republicans and watchdogs alike.
Despite a flurry of recent changes to the program, the Congressional Oversight Panel, chaired by Harvard Prof. Elizabeth Warren, outlines a slew of criticisms in a new report to be released today.
"Treasury's programs are not keeping pace with the foreclosure crisis," the panel says in the report. "Treasury is still struggling to get its foreclosure programs off the ground as the crisis continues unabated."
CLICK HERE to read the full report.
To date, only around 170,000 borrowers have received permanent mortgage modifications under the program. While Treasury has said that 1.3 million borrowers have been offered trial mortgage modifications, a total of 2.8 million homeowners received foreclosure notices last year, a fact the Panel says indicates that the administration's response is lagging "well behind" the speed of the crisis.
"For every borrower who avoided foreclosure through HAMP last year, another 10 families lost their homes," the panel says. "It now seems clear that Treasury's programs, even when they are fully operational, will not reach the overwhelming majority of homeowners in trouble."
Even if the program fulfills its goal of helping 3 million to 4 million borrowers stay in their homes, the panel said, "the goal itself seems small in comparison to the magnitude of the problem."
