HAMP defaults at “alarming rate,” says TARP IG
posted at 12:41 pm on April 25, 2013 by Ed Morrissey
Plus ça change, plus c’est la même chose …
Struggling homeowners who received loan modifications under a federal government program are defaulting on their mortgages at an alarming rate, according to a watchdog report released Wednesday.
The report from the special inspector general for the Troubled Asset Relief Program said the Treasury Department’s Home Affordable Modification Program, or HAMP, has failed to ensure that mortgage reductions are sustainable.
Home loans modified in the third and fourth quarters of 2009 are now defaulting at a rate of 46 percent and 39 percent, respectively. As of the end of March, more than 312,000 homeowners have defaulted on mortgages modified under HAMP, according to the report.
“This is a significant problem,” said Christy Romero, special inspector general for TARP. “When homeowners fall out of these modifications, all of a sudden they’re facing huge mortgage payments. If they can’t afford it, they’re going to get foreclosed on.”
Just a reminder — this program cost US taxpayers $75 billion, as part of Barack Obama’s stimulus bill in 2009. Taxpayers who presumably keep up with their mortgages ended up subsidizing those who couldn’t (or in some cases wouldn’t) in an effort to keep the housing market from collapsing. In some cases, the assistance has helped, but a 39%-46% default rate is outrageous. It demonstrates that the program didn’t do a very good job in judiciously investing public funds into mortgages, which was the main cause of the 2008 financial collapse as well.