Is HAMP Really Helping Anyone?

According to a recent report from the Troubled Asset Relief Program’s (TARP) Special Inspector General, the leading financial bailout funds’ watchdog, this country’s mortgage relief programs are failing miserably.  TARP was introduced and put into action in the Fall of 2008.  TARP is responsible for purchasing assets and various equities in order to improve the financial arena.  It was also the Bush administration’s response to the subprime mortgage crisis.

The US Department of the Treasury, through TARP, can buy or insure up to a maximum of $700 Billion in troubled assets—created or issued on/or before March 14th, 2008.  As well, financial institutions which sell assets to TARP must issue equity warrants—security which enables its holder to buy shares in the issued security’s company, or, provide equity or senior debt securities to the Treasury.

TARP’s report is scathing, saying, “…Many of Treasury’s recent efforts have focused on the Home Affordable Modification Program (HAMP) and related foreclosure prevention initiatives.  Unfortunately, HAMP continues to struggle to achieve its original stated objective, to help millions of homeowners avoid foreclosure “by reducing monthly payments to sustainable levels.”

The report goes on to show less than 400,000 ongoing permanent modifications—well below the “millions” once projected, while “…the number of trial and permanent modifications that have been canceled substantially exceeds the number of homeowners helped through permanent modifications.”

This report comes on the heels of The Federal Housing Finance Agency issuing 64 subpoenas which carry a hefty $30 billion in bad mortgages.

Joshua Rosner, a financial analyst credited with predicting the market’s crash for securities, recently noted, “Fannie Mae and Freddie Mac’s regulator may identify as much as $30 billion of debt included in mortgage bonds that the companies can force sellers to repurchase…”  It has yet to be determined if misrepresentations will force issuers to re-buy debt in order to payback taxpayers.