Tuesday
Apr202010
Treasury Should Mandate Mortgage Modifications, Says TARP Watchdog
Tuesday, April 20, 2010 at 11:24AM
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."
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."