CBO: Homeowner Rescue a Big Bust

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For all the plaudits and praise heaped on Treasury Secretary Tim Geithner lately (profiles, for instance, in the New Yorker and the Atlantic), consistently omitted is the abysmal failure of the Treasury’s homeowner relief initiative, the Making Home Affordable program. The core of that program is the Home Affordable Modification Program (HAMP), a multibillion-dollar effort that’s done next to nothing to alleviate the ongoing foreclosure crisis. (Read this and this for more.) A year into HAMP, only 170,000 people have received permanent reductions in their monthly mortgage payments. (By contrast, foreclosures last year set a new record, with 2.8 million.)

Now comes the news, via the nonpartisan Congressional Budget Office, that HAMP, which was initially projected to spend $50 billion helping homeowners, will only spend 40 percent of that, or $20 billion. What that means for beleaguered homeowners is that far less help is on the way from an already wounded program. Which shouldn’t come as a surprise. Whereas Obama himself said in February 2009 that the Making Home Affordable program “will help between 7 and 9 million families restructure or refinance their mortgages,” the Treasury Department’s goal, in the case of HAMP, has always been to “offer” 3 to 4 million modifications to homeowners—with no guarantee for help.

The revision for HAMP as well is no surprise given criticism from watchdogs like the Congressional Oversight Panel. Last October, the COP said in its monthly report that “[i]t increasingly appears that HAMP is targeted at the housing crisis as it existed six months ago, rather than as it exists right now.” In other words, the program was outdated a mere six months after it began. And the CBO’s recent findings only confirm what others, like the COP, have stated: that Geithner and Obama’s tepid homeowner rescue has fallen far short of providing the kind of relief to lift the country out of its housing and economic slump.

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