HAMP Critics: What is the True Foreclosure Rescue Rate?

President Obama and foreclosure crisisThe question of the true success rate of the Obama Administration’s Home Affordable Modification Program is not being answered by the U.S. Treasury in its public reports, some lawmakers allege.
And even housing market experts and watchdogs are saying the foreclosure prevention campaign amounts to a futile effort, with default rates as high as 70 percent projected for borrowers with modified mortgages. 
On Thursday, a report authored by two House Republicans was released that called HAMP a complete failure.
“In its current form, HAMP both hurts homeowners who might otherwise spend their trial-period mortgage payments on rent and also distorts the housing market, delaying any recovery. Treasury owes American taxpayers and homeowners an honest explanation of HAMP’s ill-advised creation and ongoing mismanagement,” the scathing report reads.
In recent days, the authors of this report  — Rep. Darrell Issa, R-California, ranking member of the Oversight and Government Reform Committee, and Rep. Jim Jordan, R-Ohio, ranking member of the Domestic Policy Subcommittee — have emerged as the two most vocal Republican opponents of the HAMP program.
They also sent a strongly-worded letter to Treasury Secretary Timothy Geithner last week seeking “full transparency” on the program’s true success rate. They referred to missing data regarding the number of borrowers who have applied for assistance.
The figure Treasury gives is the total pool of eligible borrowers – those 60 days late on their mortgages. That figure was 3.4 million through January. HAMP reported a 28 percent rate of assistance, including those active in the trial phase (830,438) and those granted permanent status (116,000). The two figures combined represent the 28 percent out of the 3.4 million eligible.
The rate of conversion to permanent relief is 3 percent, based on those eligible.
The pool of eligible borrowers is an estimate based on information provided by mortgage services that follow certain criteria, such as the amount of the loan and whether the property is owner-occupied.
“Many Americans are throwing their money into homes that they believed the government would help them keep, only to find out thousands of dollars later that they will face foreclosure anyway,” Jordan said during a House hearing this week.
For President Obama and Treasury officials it is not a matter of just partisanship. Democratic lawmakers have joined the growing discontent over HAMP.
“You’re going to have to do more,” said Rep. Dennis Kucinich, D-Ohio, who chairs the House Oversight and Government Reform subcommittee on domestic policy, told a top HAMP administrator at the hearing on the program’s progress. 
Phyllis Caldwell, chief of the U.S. Treasury’s Homeownership Preservation Office, said HAMP is working toward the goal of permanently assisting 4 million homeowners by 2012. And its working, she said.
Although she conceded that much work is needed in reaching borrowers and improving program efficiency.
In their letter to Geithner last week, Issa and Jordan said the Treasury stopped reporting the cumulative number of borrowers who have applied for HAMP  – virtually alleging a cover-up by HAMP administrators.
“Americans have a right to know when government programs succeed and whey they fail,” Issa and Jordan wrote. “Bad news needs to be shared promptly and honestly – not covered up in an attempt to avoid public scrutiny.”
The two Republicans said Treasury officials have not responded to their letter.

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