The latest reports are out on two of the three Obama mortgage initiatives and the numbers don’t look too good. That doesn’t bode well for the future of these programs, considering the House voted this week to axe the mother project, Home Affordable Modification Program (HAMP), in place since 2008.
That initiative gave incentives to mortgage servicers to modify loans for borrowers in danger of foreclosure. Of the 1.5 million participants, roughly 823,000 have dropped out or have been kicked out of the program. That’s a fail rate of almost 55 percent. In all fairness, this means the government was able to help about half the participants stay out of foreclosure, but the efforts are small compared with the millions HAMP was designed to help.
Now the other two initiatives are showing lackluster results as well. The first is supposed to help borrowers get their second mortgages modified. The Treasury Department reported that only 17,000 homeowners have received a modification on a second home loan during the past year of this program.
The second program focused on helping troubled borrowers work out short-sales with the banks. The Treasury says in the past year, 10,000 homeowners have enrolled in the plan and of those, only about 4,500 had their short-sales accepted.
Despite the numbers, the Treasury seems determined to push on with these programs.
“Without question, we have not helped as many people under HAMP as we originally estimated,” said Timothy Massad, the acting assistant secretary for financial stability, as quoted on a New York Times blog. “Much of that is due to prudent eligibility criteria under a program designed to protect limited taxpayer resources. As a result, we’ve also spent far less on HAMP than we originally estimated.
“…The housing crisis took years to create, and there is no easy or quick way to repair the deep damage that it caused. We believe that HAMP continues to provide critical assistance for homeowners and is an important part of the continued recovery of the housing market. We will continue to work to strengthen program implementation while providing additional relief for communities hit hard by foreclosure.”