The Destroyers to the Rescue?
On the back of today's Mother Jones investigation into the government's $75 billion, largely taxpayer-funded foreclosure relief program—a program shaping up to be a massive bust yet doling out millions and even billions to some questionable mortgage servicers—the Center for Public Integrity has released its own analysis of the program, the Home Affordable Modification Program. CPI found that of the top 25 HAMP servicers, at least 21 "were heavily involved in the subprime lending industry." Of the tens of billions allocated to HAMP, much "is going directly to the same financial institutions that helped create the subprime mortgage mess in the first place," says CIP executive director Bill Buzenberg. The fox, in other words, is guarding the heavily mortgaged hen house.
By all measurements, HAMP has been a bust. As I write in a story published today on MotherJones.com:
Industry experts are now questioning how many of the program’s estimated 235,000 modifications will actually benefit homeowners in the long term, and say that homeowners clamoring to participate in HAMP have created an industrywide logjam for mortgage servicers, resulting in substantial delays and backed-up customer service support. ...
The Treasury’s first servicer performance report (PDF), covering March to July 2009, found that servicers had offered modifications to just 15 percent of eligible delinquent homeowners, and initiated them for just 9 percent of that group... Lawmakers in Washington, including Sen. Dick Durbin (D-Ill.) and Rep. Barney Frank (D-Mass.), chairman of the powerful House financial services committee, have begun to voice doubts over whether HAMP servicers are doing enough to help homeowners. Now Frank and Durbin are revisiting the idea of allowing bankruptcy court judges to modify mortgage terms, an option called “cramdown” that the Senate rejected earlier this year.