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Loan Modification Program Is a 'Terrible Failure,' Says TARP Watchdog

Tuesday, March 29, 2011

WNYC

The departing special inspector general for the Troubled Asset Relief Program, or TARP, said the government's efforts to modify loans and keep people in their homes was a "terrible failure." 

Speaking to WNYC's Brian Lehrer on Tuesday, Neil Barofsky says the program, originally created in 2009 to help 3 to 4 million homeowners by 2012, has only reached 540,000 homeowners thus far.

"It's a failure because there are all those people who were promised to get help, who could've gotten help, who could stay in their homes will never be reached because of a program that was frankly poorly designed, poorly managed and poorly executed," said Barofsky, who assumed the role of TARP's watchdog in December of 2008.

And some members in the House of Representatives agree. The House is scheduled to vote tonight to eliminate funding for HAMP.

The Obama Administration has defended the program.

"Ending this program would be very unfortunate," said Timothy Massad, the Treasury Department's Acting Assistant Secretary for Financial Stability. "This program is continuing to help tens of thousands of families each month. And those who want to terminate it would basically just throw the problem back to the mortgage servicing companies, which in large part have been responsible for this problem."

When asked why the program hasn’t reached the intended 3 to 4 million homeowners, Massad said: "We overestimated how many people would be eligible originally [for the program], but no one can predict that sort of thing. The fact is we still have two years to run and so if we can continue this program, we can continue to help lots of people."

Barofsky, who leaves his TARP watchdog role March 30 and will be teaching at New York University Law School this fall, said that given the projections of 10 to 13 million foreclosure filings over the life of HAMP, the federal government's efforts are a "drop in the ocean."

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Comments [7]

Klw 21601 from Us

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Jun. 18 2013 09:21 AM
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Apr. 01 2011 03:14 PM
hbaker

Neither Congress nor Treasury has developed an enforcement mechanism to combat servicer noncompliance with HAMP. Treasury has used various incentives to encourage servicer participation, but these carrots have not resulted in servicer compliance with HAMP guidelines. Moreover, Congress’ failure to amend the Bankruptcy Code to permit mortgage modifications in bankruptcy court has meant that homeowners have not had an effective stick to leverage modifications both in and outside bankruptcy.

Mar. 30 2011 10:24 PM
Beverly from Fontana, California

The House of Representative are scheduled to vote tonight to try and eliminate fundings for HAMP!? Im in Pending Status! Whats going to happen to me!? If they Eliminate ? I am a single mother of two, I have a very good job and good pay! I fell behind late last year do to hardship (my son became ill had to miss work to do appts, therapy for him! he is now permenently disabled and I got a good handle on it now, I can now afford my mortgage but not what I fell behind ! whats going to happen to me and my Kids???

Mar. 30 2011 09:03 PM
maricela from Online

So this the five banks are not Help the people to do a Mortgage Modification Loan to Avoid A Foreclosure?
in the Gov is not help the people so who will help the people? , I have Mortgage Modification System to help the people in it is updated to incorporate the latest government Mortgage Modification programs implemented by the Obama Administration. So you are say the Bank are failed , Do Your Own Mortgage Modification For Less Than $? http://www.calculatormortgageamortization.com/

Mar. 30 2011 10:45 AM
richardhall345 from oakpark


Mortgage Rates have hit an all time low! For many, these rates will be the lowest we see in our lifetime. Rates change several times throughout the day, so to get an accurate quote search online for "Mortgage Refinance 123" learn about mortgage refi before you do refi on your home.

Mar. 30 2011 05:56 AM

TARP is a failure. Only one half a million people helped, and all those who were promised help that never did come. Republicans and Dems are equal at fault.

Mar. 29 2011 11:50 PM

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