Investigator slams foreclosure aid program
FILE - A Jan. 10, 2009 file photo shows a bank repo and foreclosure for sale signs outside a foreclosed home in Houston. Foreclosure sales plunged 25 percent in the July-September quarter versus the April-June period and tumbled 31 percent from the third quarter last year, foreclosure listing firm RealtyTrac Inc. said Thursday, Dec. 2, 2010. (AP Photo/David J. Phillip/file) Credit: AP Photo/DAVID J. PHILLIP
A special inspector's report accuses the U.S. Treasury of mishandling a program to help at-risk homeowners avoid foreclosure.
Special Inspector General Neil Barofsky says the Treasury Department has constantly shifted the criteria for success and refused to get tough with mortgage companies that have dragged their feet and excluded qualified homeowners.
The main foreclosure program's "achievements look remarkably modest, and hope that this program can ever meet its original expectations is slipping away," Barofsky says of the Home Affordable Modification Program, known as HAMP.
The Treasury must "recognize the failings of HAMP and be willing to risk offending servicers," according to Barofsky's prepared testimony reported on Mortgageorb.com. Barofsky is appearing Wednesday before the House Oversight Committee. His quarterly report was released Tuesday.
So far, the Treasury has not levied a single fine or demanded repayment of HAMP incentives for any reason other than servicers' failure to provide data, "despite nearly daily accounts of errors and more serious misconduct," Barofsky says in his testimony. The Treasury has cited fear of servicer withdrawal and limited enforcement authority as reasons why there have been so few penalties.
"Without meaningful servicer accountability, the program will continue to flounder," Barofsky says in his testimony, adding later, "And if getting tough means risking servicer flight, so be it; the results could hardly be much worse."
