U.S. Program to Avert Foreclosures Called a Failure
Lawmakers branded a U.S Treasury-led effort to slow the rate at which distressed mortgage-holders are being thrown out of their homes as "an abject failure".
The scathing review of Treasury's Home Affordable Modification Program, or HAMP, brought fresh promises from a senior Treasury official to get tough with banks but didn't soothe members of the House Financial Services Committee who said they are besieged by complaints.
"There is great frustration at the failure of the government to come to grips with the foreclosure issue," committee chairman Barney Frank of Massachusetts said at the start of a lengthy hearing that also heard representatives from banks and regulatory agencies.
The $75-billion HAMP program is intended to bring troubled borrowers together with lenders to work out an agreement for modifying loans so that homeowners can lower their payments and stay in their homes.
Lawmakers say the rate at which people are able to move from "trial" modifications to permanent ones is too slow, partly because of banks' paperwork demands as well as poorly trained personnel who lose documents, and general foot-dragging by lenders who don't want to write down loans.
As a result, foreclosures keep rising and are expected to number millions more in coming years, which Frank said was a painful cost for homeowners to bear because of a financial crisis that stemmed partly from irresponsible lending.