Just when we all thought it was safe to go back in the water. Did any of us actually think some govt program would save us?
In an interview today on Fox Business, Neil Barofsky, the special inspector general to the Troubled Assets Relief Program said that foreclosures are coming, millions of them. The TARP “watchdog” indicated that the government’s foreclosure relief program, HAMP isn’t working; and it now seems obvious to most that it was never expected to work. Citing uncooperative lenders and servicers, and an unwillingness from Treasury to pressure compliance, Barofsky once again pointed out how the Administration’s promises to help millions of homeowners avoid foreclosure have been a dismal failure. With the potential for as many as 13 million foreclosures during this crisis, and the likely number saved to be 6% or less, foreclosures are coming, millions of them.
Early last year, Barofsky wrote a report in which he harshly criticized Treasury for the way it had established and managed HAMP, but those administering the program have failed to act upon any of the recommendations that might have brought about improvements. With current modifications running approximately 10,000 per month, and with just over a half-million having received a permanent modification, avoiding foreclosure has proven to be nothing more than a nightmare for struggling homeowners.
In a bit of tragic irony, thousands of those applying for mortgage relief have been forced into foreclosure as a result of seeking a loan modification. In a post I wrote last year, Requesting a Loan Modification may be Financial Suicide, I pointed out some of the dangers and pitfalls: With a number of lenders advising homeowners to intentionally miss payments in order to increase their chance of approval, what they fail to tell the homeowner is that missed payments will result in an immediate lowering of credit scores. Additionally, borrowers are unaware that if approval isn’t received they can be hit with thousands of dollars in back payments and “late fees,” making catching up an impossibility that insures foreclosure.
Officials at Treasure have admitted that the program will fall far short of its goals. And even though the funds earmarked for loan modifications were only a fraction of the amount committed to Wall Street and the big banks, little of the money has been spent. It would appear that HAMP was never more than a political ploy to quiet the masses, while the government pumped hundreds of billions to save Wall Street and bankers “too connected to fail.”
The Housing Guru: The expert source for all your housing questions—now featuring daily updates of Today’s Housing News