Is HAMP a boat without a tiller?

• The cries in Washington are too little, to late
• Not true, says Treasury, wait and see

According to Inspector-General for the Troubled Asset Relief Program Neil Barofsky, HAMP has fallen short of its objectives precisely because the Treasury Department failed to formulate these clearly enough in the first place, and this was the core thought of the presentation he made to Congress on Wednesday last.

The fanfare at the rime when the program was announced in Obama’s early days implied that between three and four million mortgaged Americans could look forward to some form of relief; just 390,000 have actually been assisted in terms of the $50 million program bankrolled from the $700 billion dollar Wall Street rescue effort.

Neil Barofsky was echoing what the Chairperson of the Congressional Oversight Panel Elizabeth Warren already thinks when he said “… it’s a simple recommendation that we made, that Treasury put forth how many people it truly expects to help stay in their houses through permanent modifications.” He has been supported in this by Richard Hillman of the Government Accountability Office, who has gone on record as saying that the program had “made limited progress in preserving homeownership, has suffered from inconsistent program implementation, and continues to confront additional challenges.”

Elizabeth Warren is a candidate to head up the new Consumer Financial Protection Panel, and her thinking that the mortgage modification project could have been better handled may make more waves yet for embattled Treasury Department managers. “Fifteen months into this program, for every one family that appears to have made it to a permanent modification that’s likely to stabilize that family in that home, 10 more have been moved out through foreclosure,” she remarked during the review. “This is a program that’s just — it’s behind the curve.”

Many leading American politicians on both sides of the House are beginning to realize that HAMP is too slow to work properly. A core problem that is worrying them is that it is still more profitable for banks to follow through on repossession, than accept a Washington handout.

Assistant Treasury Secretary responsible for HAMP Herbert Allison has been quoted as saying that he expects that the program will still reach 1.3 million households. This type of gap in thinking is alarming. Either a gigantic hockey-stick effect is waiting up the line, or the Treasury hand on the tiller is watching a completely different movie. According to Allison, the program is trapped in a paradigm, that would provide an escape hatch for banks to leave if the duress clauses were tightened. “We can’t control outcomes,” he added, “because we can’t control the number of people who become delinquent, who have hardships, who have debt-to-income ratios above 31 percent, who decide to pay and remain current, who decide to remain in their homes.”

Find foreclosed real estate at www.foreclosureconnections.com.