Bailout watchdog criticizes home loan programBy Aisha Qidwae Mar 25 2010 4:33 p.m.
A year after the $75 billion program to reduce mortgage payments under the Home Affordable Modification Program (HAMP) went into effect, a recent audit report criticized the outcome of the program as "disappointing." So far, out of the million trial mortgage modifications, under which homeowners can have their mortgage payment reduced for three months, only 168,000 loans have been permanently reduced falling drastically short of the 3 to 4 million initial goal of the Department of Treasury.
According to the Special Inspector General for the Troubled Asset Relief Program audit Treasury admitted its goals of the HAMP program have been "confusing" as it clarified that 3 to 4 million borrowers will be offered trial mortgage modifications for a three month period through 2012, but not actually permanently modify all of those homeowner's mortgages. As of February 2010, only 20 percent of the trial mortgage reductions were permanently modified.
Under the HAMP, 110 loan services, including bailed out Fannie Mae and Freddie Mac, lowered monthly payments of homeowners to an affordable mortgage of 31 percent of the homeowner's monthly gross income.
The audit also focuses on the HAMP's marketing and outreach strategy, which the report states has been limited and inconsistent. In April 2010, the first public service announcement about the program will hit the airwaves.
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