Inspector General: Mortgage Modification program a ‘Failure’

By Gregory Korte, USA TODAY

WASHINGTON

A mortgage modification program aimed at saving homeowners from foreclosure has failed because regulators are “afraid to rein in or impose penalties on the mortgage servicers” whose record “has been nothing short of abysmal,” the program’s watchdog told Congress Wednesday.

As a result, some House Republicans moved to scrap the 2-year-old program.

Neil arofsky, the special inspector general for the government’s bank bailouts, bluntly labeled the mortgage program a “failure” in testimony before the House oversight committee.

“And I think that if Treasury doesn’t respond to some of these things in a quick manner,” he said, the call to dismantle the Home Affordable Modification Program (HAMP) “is just going to become a louder and louder chorus, and understandably so.”

Three Republicans, led by Rep. Jim Jordan, R-Ohio, introduced a bill Tuesday to end the program, saving up to $30 billion in unspent bailout funds.

“We think any objective look at this, it doesn’t warrant continued spending of taxpayer dollars,” Jordan said. He did not say what, if anything, he would replace the program with.

Consumer advocates said HAMP should be given a chance. “It’s far from perfect, but it’s the only thing going,” said Kathleen Day, a spokeswoman for the Center for Responsible Lending.

Blame for HAMP’s poor performance rests not with the Treasury Department, but with a mortgage-servicing industry that “can’t distinguish between the foreclosures that are inevitable and those that are avoidable,” Day said.

Indeed, Democrats on the House Oversight Committee urged Chairman Darrell Issa, R-Calif., to call executives at major mortgage servicers to testify — especially JPMorgan Chase, which has modified just 67,722 of 203,594 eligible mortgages, according to the most recent Treasury statistics.

Issa said Chase could be called to a subcommittee hearing. Chase spokesman Thomas Kelly would not say whether the company would make executives available to testify.