Geithner: Mortgage Service Companies Failing The American People

By Chingyu Wang-Talk Radio News Service

Treasury Secretary Timothy Geithner accused mortgage service companies of not providing adequate assistance to Americans at-risk of losing their homes.

"We do not believe that servicers are doing enough to help the homeowners, they are not doing enough to help navigate the difficult and often frightening process foreclosure," said Geithner.

To counter the mortgage service companies’ shortcomings, Geithner touted a new program developed by the Obama administration entitled Home Affordable Modification Program (HAMP).

"HAMP has now offered trial modification to more than 1.4 million Americans, this represents roughly 3 quarters of Americans estimated to be eligible for this program today. About 1.2 million homeowners have begun trial modification and seen an immediate reduction in their monthly mortgage payment by an average just more than $500 per month,” Geithner said.

The secretary stressed that the program is not designed for those who those invest in real estate or are at risk for losing vacation homes.

Treasury Should Mandate Mortgage Modifications, Says TARP Watchdog

The man in charge of monitoring the Troubled Assets Relief Program (TARP) told members of the Senate Finance Committee Tuesday that the Obama administration should consider forcing lenders to reduce payments for homeowners behind on their mortgages.

Neil Barofsky, the Special Inspector General of TARP, a $700 billion financial rescue program designed to help cushion the blow of the recent housing collapse, said that foreclosures have increased since the current administration announced measures last year to straighten out the housing market.

According to Barofsky, the Treasury Department's Home Affordable Modification Program (HAMP), a voluntary $75 billion foreclosure-prevention policy which gives payments to lenders who agree to reduce the principal on homeowners' loans, “has made very little progress in stemming this onslaught."

In a report put out Tuesday morning, Barofsky wrote that the Treasury Department could do more for borrowers by making the program mandatory.

"Giving servicers the discretion to implement principal reduction introduces a questionable inconsistency into the HAMP program and stands in stark contrast to the mandatory nature of the other significant mortgage modification triggers."

Creating Jobs Key To Preserving Homeownership, Say Experts

By Benny Martinez
University of New Mexico/Talk Radio News Service

The Home Affordable Modification Program (HAMP) is not gaining as much traction as expected, said a panel of experts during a hearing on Thursday before the House Committee on Oversight and Government Reform.

The HAMP program, authorized by the Department of Treasury in 2009, is a loan modification program designed to reduce at-risk borrowers' monthly mortgage payments.

According to National Community Reinvestment Coalition CEO John Taylor, HAMP is “simply failing to make a difference” in the lives of American homeowners.

Taylor said that HAMP and its complementary program, the Home Affordable Refinance Program (HARP), were initiated to assist roughly five million permanent loans. Currently, Taylor said that only about 300,000 have been modified or refinanced, thus illustrating how HAMP and HARP have so far failed.

Taylor said he believes another reason behind HAMP’s stalled progress is that the Treasury Department has only used $22 billion of a near $75 billion program budget.

“Why they’re sitting on these funds is beyond belief,” he said.

Cato Institute (Washington, D.C.) Director of Financial Regulation Studies Mark Calabria said that the failure of these programs coupled with adverse income shocks are the underlying reason for the lack of improvement in the housing sector.

“About 50 percent of foreclosures today are driven by job loss [and] there is absolutely no way we can address the foreclosure situation without addressing the job situation,” Calabria said.

“Foster an environment that is conducive to private sector job creation, and the foreclosure problem will follow that,” assured Calabria.