Can the government’s Home Affordable Modification Program be salvaged or should a new program be instituted?
Rep. Jackie Speier, D-Calif., suggested that the government “scrap” the HAMP program and grant all at-risk borrowers the right to rent their homes.
The House Oversight and Government Reform Committee member urged the banks to create such a rental program with an option to buy.
“We should take the money we have set aside for this (HAMP) program and subsidize the banks if necessary to keep borrowers in their homes,” she said at a hearing.
The California Democrat told the story of a homeowner who entered the HAMP program and made all the monthly trial payments on time.
But he never received a permanent modification and now his house is being sold on April 7. “That is a travesty,” Speier said.
There are 835,000 people in the HAMP payment trials and they should be dealt with equitability, according to Gene Dodaro, acting comptroller general at the Government Accountability Office.
“They entered into this program in good faith. They need to have an appeal process if they are running into difficulty,” Dodaro testified. Treasury assistant secretary Herbert Allison told the committee that his agency is dealing with this issue. He made it clear that servicers cannot start the foreclosure process while a decision on a permanent modification is pending.
“For HAMP to reach its true potential, implementation must continue to be improved, servicers must recommit to a better borrower experience and outcome and program enhancements must continue,” Allison testified.
The Troubled Asset Relief Program special inspector general Neil Barofsky told the committee members that there has to be a re-evaluation of HAMP.
“Treasury has to look at why these problems are occurring. Do something as simple as setting goals and measuring performance,” Barofsky said.
Treasury has been successful signing up more than 110 servicers to participate in the HAMP program. But HAMP has been plagued by certain errors, Barofsky said. “Servicers have complained to us about constant changes in program guidance.”