Too slow, ineffective and unaccountable.
That's how the Troubled Asset Relief Program's Congressional Oversight Panel (COP) describes the Treasury in regard to its HAMP foreclosure prevention effort in a report (.pdf) released today. It follows another critical oversight report on the program issued last month by the Special Inspector General of TARP the with many of the same findings. While the COP places some hope in recent changes to HAMP, overall it's very displeased with the Treasury's progress thus far.
The COP report lists three main complaints:
The committee asserts that the Treasury isn't quick enough to determine necessary changes, institute them and generally stop foreclosures. It says that even Treasury's March revisions won't be felt until early 2011, by which time millions more Americans will have lost their homes.
Here, re-default is the worry. We're beginning to get a taste of that from March's HAMP report. But re-defaults have barely begun. COP is concerned that temporarily lowering mortgage interest rates to achieve smaller payments won't be enough. First, underwater homeowners may not find it worthwhile to modify if principal is left alone. Second, in five years when the mortgage's interest rate goes back up under the program's conditions, borrowers may find their home unaffordable again and re-default. COP writes:
The redefaults signal the worst form of failure of the HAMP program: billions of taxpayer dollars will have been spent to delay rather than prevent foreclosures.