Most of Treasury’s Successful Mortgage Modifications Weren’t Actually Successful

As Matt Welch already noted, the Special Inspector General’s oversight report on the Treasury Department’s TARP self-reporting is tough stuff. Not only did Treasury change its accounting practices without disclosure in order to make losses on AIG look smaller, it wildly overstated the so-called positive effects of HAMP, the mortgage modification program. As CNN reports:

Treasury has said several times that its mortgage modification program has "helped" more than 1.3 million homeowners by reducing their monthly mortgage payments, calling each of these a "success," the report said.

However, Barofsky's team took issue with the level of success, saying more than 700,000 of the modifications ultimately failed and another 173,000 remained in limbo.

"They say for example that they've helped more than 1.3 million people through mortgage modifications, but more than half of those have failed," Barofsky said. "Then, they go and say, ' Well, each one of those had a significant benefit for the homeowner.' And that's just not true."

As Tim Cavanaugh pointed out back in August: HAMP didn’t benefit homeowners very much. But it did help keep big banks afloat.

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  • ||

    more than 700,000 of the modifications ultimately failed and another 173,000 remained in limbo.

    "There's nothing wrong with you an expensive operation can't prolong."

  • Old Mexican||

    Not only did Treasury change its accounting practices without disclosure in order to make losses on AIG look smaller, it wildly overstated the so-called positive effects of HAMP, the mortgage modification program.

    Gee, I wonder if I can get away with that despite GAAP . . .

    Nah. Gunvarmint types are above the law anyways . . .

  • bingo||

    It's not illegal if the government does it!

  • ||

    "They say for example that they've helped more than 1.3 million people through mortgage modifications, but more than half of those have failed," Barofsky said. "Then, they go and say, ' Well, each one of those had a significant benefit for the homeowner.' And that's just not true."

    Sure it is. What else do you call another six months of rent and payment free lodging?

  • Fluffy||

    Well, to be fair, homeowners participating in HAMP are actually still making payments, albeit at the terms of the temp mod or permanent mod.

    It's people who aren't participating at all but who are simply hanging out awaiting foreclosure who are living payment-free.

  • ||

    Though if they are on a temporary mod and paying the reduced amount, then are found not eligible or the mod otherwise fails, they'll find themselves owing the original amount plus extra interest, etc.

  • EJM||

    But it did help keep big banks afloat.

    I haven't gone through the full report myself, but there's at least the suggestion that that's why the U.S. encountered a significant drop in the new global rankings from TI.

  • ||

    Hey, they sucessfully mofified the mortgages.
    Keeping homes from being foreclosed on was never one of the metrics.

  • ||

    Neil Barofsky must have balls of solid titanium. At least three.

  • CatoTheElder||

    The exec summary of the SIGTARP report is interesting reading. It's refreshing to read a report written by a government official that says that the Administration is lying, cheating, and stealing while creating moral hazard, enriching undeserving rent seekers, imposing unnecessary burdens on taxpayers, and generally enraging an already angered populace.

    Check this link at 05:30 for a very interesting interview with William Black, a guy with real experience from the old S&L scandal days.

    http://www.msnbc.msn.com/id/21134540/vp/39836703#39836703

  • CatoTheElder||

    http://www.msnbc.msn.com/id/21.....3#39836703

    "This crisis is all about fraud ... Geitner's analytics are entirely wrong ...
    fire Holder, fire Geithner, fire Bernanke, get people in who will enforce the rule of law."

  • cynical||

    Christ, when you've lost MSNBC...

  • ||

    The other day, some Fed bigwig was on CNBC; somebody pointed out to him the direct conflict between the Fed's anticipated QE2 and Geithner's allegations regarding the administration's commitment to a strong dollar.

    The guy from the Fed practically said, "We don't really pay much attention to what Timmay says."

    So maybe Barofsky doesn't worry about Timmay very much, either.

  • Fatty Bolger||

    HAMP was really a vote buying scheme. I guess it failed there, too.

  • R Rogers||

    The article is good in pointing out the continuing chaos and that there is still a great deal of instability in the Economy and thus the mortgage loan modification programs. People need to know what they are up against and where the lenders are coming from. My website deals specifically with these issues and offers a perspective from both sides, the lender and the borrower.
    http://www.mortgagemodificationsystem.com/rrogers/

    R Rogers

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