ProPublica report on Obama/Geithner's failed HAMP: wasted billions, incompetence, maybe worse

[brentspeak]

ProPublica has done Pulitzer-quality work in detailing the colossal HAMP failure -- which, along with the Bush/Obama TARP bailouts, is the great post-Bush scandal of our time.

http://www.propublica.org/article/secret-docs-on-foreclosure-watchdog

by Paul Kiel
ProPublica, Oct. 4, 2011, 11:26 a.m

Why has the administration’s flagship foreclosure prevention program been so ineffective in helping struggling homeowners get loan modifications and stay in their homes? One reason: The government’s supervision of the program has apparently ranged from nonexistent to weak.

Documents obtained by ProPublica—government audit reports of GMAC, the country’s fifth-largest mortgage servicer—provide the first detailed look at the program’s oversight. They show that the company operated with almost no oversight for the program’s first eight months. When auditors did finally conduct a major review more than a year into the program, they found that GMAC had seriously mishandled many loan modifications—miscalculating homeowner income in more than 80 percent of audited cases, for example. Yet, GMAC suffered no penalty. GMAC itself said it hasn’t reversed a single foreclosure as a result of a government audit.

snip

Abuses of the foreclosure process, in which banks and mortgage servicers cut corners or even http://www.propublica.org/article/gmac-mortgage-whistleblower-foreclosure/">created false documents to move troubled borrowers out of their homes, have been http://www.propublica.org/article/as-regulators-and-banks-review-foreclosures-well-be-watching/">extensively documented, along with http://www.fhfaoig.gov/Content/Files/AUD-2011-004.pdf">failures by government to regulate the industry. But the lapses revealed in the documents obtained by ProPublica stand out because they occurred within the government’s main effort to prevent foreclosures, the Home Affordable Modification Program.

snip

But Treasury defended the questionable denials, and in so doing raised even more questions. For instance, the spokeswoman said HAMP “does not specifically require servicers to evaluate loans that are less than 60 days delinquent.” But Treasury’s official guidance to servicers said such borrowers “must be screened.” “It makes you wonder if the Treasury even knows the rules for their own program,” said the National Consumer Law Center’s Thompson.

[Tarheel_Dem]

1. You know the routine. Unrec.

:hi:

[KoKo]

4. You are proud of being an "habitual UnRec?" of a ProPublica Article, too?

Sheesh.

[Tarheel_Dem]

6. Proud UnRec'er here.

:hi:

p.s. If you want anti-Obama crap on the front page, take it over to that well known anti-Obama site known as GD.

[Hart2008]

9. Shame! Shame! Shame!

:puke:

[Tarheel_Dem]

10. Monkey Business anyone?

:rofl:

[Hart2008]

12. Rent any Marx Brothers movie you want. NT

[dionysus]

26. maybe you'll feel better if you drink a ginger ale or something.

:shrug:

[emilyg]

19. You don't like truth?

[Tarheel_Dem]

20. I don't like propagandists. See ya!

:hi:

[FrenchieCat]

2. GMAC is a bank, not the government.....

The HAMP program was not put in place to order banks to do what they did.

The HAMP program was a program that "encouraged" banks to do the right thing,
but the HAMP program didn't have the kind of regulations in place to have the kind of control
on the financial institutions to get done what was needed.

The bad actors isn't the HAMP program, but rather the banks. That's why the article names GMAC....
and the documents used to even write the article were audit documents From the Government....
The article goes on...."The Treasury provided only GMAC’s audits, because the company consented to their release. ProPublica continues to seek all of the reports."

goes on....."As part of the $700 billion bailout program, HAMP was launched in early 2009 with a $50 billion budget to encourage loan modifications by paying subsidies to servicers, investors and homeowners. But only about $1.6 billion has gone out so far."


How many billions were wasted that you write about in your headline?

[brentspeak]

8. GMAC is almost 3/4 owned by the Treasury

http://media.ally.com/index.php?s=51

The HAMP program was a program that "encouraged" banks to do the right thing,
but the HAMP program didn't have the kind of regulations in place to have the kind of control
on the financial institutions to get done what was needed.

HAMP is a program which "encourages" banks to the do the right http://projects.propublica.org/bailout/programs/6-homeowner-affordability-and-stability-plan">with billions of taxpayer dollars given to them. The Treasury has complete authority to establish and enforce any regulations on any banks taking part in the program.

[Major Hogwash]

11. Now it is, since Obama had to take control of it!!!!

So, where's the beef??

[FrenchieCat]

14. At the link you provided.....

125 recipients
$29.91 billion promised
$1.53 billion actually invested, loaned, or spent

[brentspeak]

15. At least another $6 billion to be used

http://www.propublica.org/blog/item/as-administration-scrambles-to-help-homeowners-billions-left-unspent

And as the ProPublica series makes clear, banks have taken incentive money only to later deny most mortgage modification applicants anyway.

[KoKo]

3. K&R

[chill_wind]

5. An effing joke. Relying on the servicers to police themselves and then

taking the penalties of the table when they don't. Surprise, surprise.

"Despite a dismal showing for the program, rising complaints from homeowners, and repeated threats from officials, the government has levied no penalties against even the most error-prone banks and mortgage servicers. In fact, despite issuing public warnings for more than a year about imposing penalties, the Treasury Department told ProPublica this week they don’t even have the power to punish servicers for wrongfully denying help to homeowners. Instead of toughening the program, Treasury has actually loosened it in the face of industry lobbying."

Govt’s Loan Mod Program Crippled by Lax Oversight and Deference to Banks
http://www.propublica.org/article/loan-mod-program-crippled-by-lax-oversight-and-deference-to-banks

[Hart2008]

7. FDR created the Home Owners Loan Corp. to deal with this issue. Obama has Geithner...

Where is the Home Owner's Loan Corp.?

The Home Owners' Loan Corporation (HOLC) was a New Deal agency established in 1933 by the Home Owners' Loan Corporation Act under President Franklin D. Roosevelt.<2> Its purpose was to refinance home mortgages currently in default to prevent foreclosure. This was accomplished by selling bonds to lenders in exchange for the home mortgages.<3> It was used to extend loans from shorter loans to fully amortized, longer term loans (typically 20–25 years). Through its work it granted long term mortgages to over a million people facing the loss of their homes.
The HOLC stopped lending circa 1935, once all the available capital had been spent, and began the process of liquidating its assets.<4> HOLC officially ceased operations in 1951, when its last assets were sold to private lenders.

http://en.wikipedia.org/wiki/Home_Owners%27_Loan_Corporation#cite_note-ikl-3


Rather than lose money, the HOLC returned a profit of almost $15 million in 1951 dollars:
http://www.time.com/time/magazine/article/0,9171,858135,00.html

Now, I knew something about because someone in my family worked for the HOLC. He had long lines of people waiting to see him. The fact is that programs like the HOLC helped ordinary working people, so they identified with the Democrats. Yet, despite the fact that the HOLC clearly proved that is kept people in their homes, helped to stabilize the housing market by preventing deflation, AND turned a profit for the government, the Obama administration has refused to even consider it!

It wasn't a wasteful government program. It proved to work AND be profitable.

We don't need to play “Happy Days Are Here Again!” at the convention, but we do need to learn from what worked in the past.

:dem:

FDR gave us the New Deal, but so far, Obama is giving us a raw deal.
:rant:

[chill_wind]

13. “By any meaningful definition, that effort has been a failure." (Neil Barofsky)

According to Barofsky, HAMP’s output looks on pace to meet the Congressional Oversight Panel’s projection “of just 700,000 to 800,000 effective permanent modifications through the lifetime of the program, a small fraction of the original goal.”

He adds that there is no reason to suspect HAMP will see any significant improvement, with only a net increase of about 23,000 permanent modifications per month over the most recent quarter. Trial plans have been hovering around that same number per month.

“This is a far cry from the 20,000 to 25,000 trial modifications per week that Treasury officials once predicted,” Barofsky says.

When HAMP was first rolled out, that announcement came with the goal of helping 3 to 4 million homeowners stay in their homes through permanent government-subsidized mortgage modifications.

HAMP Results Continue to Slip
Oct 5 Carrie Bay
http://www.dsnews.com/articles/hamp-results-continue-to-slip-2011-10-05


Bank of America Faces Lawsuit Over Denied HAMP Modifications

"A judge has denied Bank of America’s motion to dismiss a case involving tens of thousands of homeowners who claim the bank denied them help through the Home Affordable Modification Program (HAMP)".

July 2011
http://www.dsnews.com/articles/bank-of-america-faces-lawsuit-over-denied-hamp-modifications-2011-07-08

[xchrom]

16. Recommend

[emilyg]

17. rec

[emilyg]

18. rec

[SidDithers]

21. Unrec...nt

Sid

[dkf]

22. The program would have had to have more incentives or punishments to overcome the

Incentives not to modify.

http://realestate.aol.com/blog/2011/10/18/mortgage-prof-why-banks-foreclose-instead-of-settling-for-les/?icid=maing-grid10%7Chtmlws-main-bb%7Cdl5%7Csec1_lnk3%7C105578

[Hart2008]

23. If Obama had nationalized the failing banks like FDR did, it's not an issue.

When the government owns the underwater mortgages, then it has the power to renegotiate the loans. Instead of bailing out the homeowners and stabilizing the housing market like FDR did, (See my post on the Home Owners Loan Corp. above) Obama just bailed out the banks. So foreclosures skyrocketed.

No mystery there.

[FrenchieCat]

24. If Obama had nationalized the banks......

He be at 10% right now....cause the narrative that he's a socialist dictator would have been
proven true. Maybe you want to live under a dictatorship, but most Americans don't like that
shit. Bush bailed out the banks. Doh!

[Hart2008]

25. FDR nationalized the banks and was reelected three times!

So you think FDR was a socialist dictator because he nationalized the failed banks?

Now we are exposing your hostility to the New Deal.

Most Americans did like that "shit".

Bush started the bank bailouts with TARP, which Obama,and Biden and supported and expanded.

'Nuff said.