Is the Mortgage Modification Program Working?

The Congressional Oversight Panel reports that the Obama administration's mortgage modification program is not keeping pace with the rate of foreclosures. For every home that is saved through HAMP, there are 10 foreclosures. Since the program's inception in fall 2009, 2,879 modified loans had been ended, up from 1,499 in February and 1,005 in January.

The program will likely fall short of its goal to help four million homeowners, instead able to assist one million. About seven million homeowners are behind on their mortgage payments, and there is a growing number of cancellations reported by the U.S. Treasury Department that they cannot explain. Most are prompted by borrowers' inability to make the new payment.

In response to the Panel's criticisms, the Treasury Department has released its own report stating 230,000 homeowners have received permanent modifications as of the end of March, an increase of 35% from those in February. In addition, 108,212 permanent modifications are awaiting borrower approval.

In a statement, a Treasury Department spokeswoman said, "We strongly agree with the COP's assessment that foreclosures are at an unacceptable high rate, which is why this program has been designed to prevent avoidable foreclosures. As we have said before, these programs are not intended to help every homeowner in trouble."

Read more on CNNMoney.com and The New York Times.

Posted on April 15, 2010 16:14:32 by Blog Author