Special Inspector General for TARP Criticizes HAMP Implementation

One year after the announcement of the Home Affordable Modification Program (HAMP) to help homeowners struggling with mortgage payments, the Special Inspector General for the Troubled Assets Relief Program (SIGTARP) released an audit of HAMP's effectiveness based on concerns about results which are, according to Treasury and others, "disappointing." The report, "Factors Affecting Implementation of the Home Affordable Modification Program," outlines the following reasons behind the disappointing results:

• Program rules that had not been fully developed when the program was launched, resulting in subsequent changes that caused confusion
• Treasury's decision to allow servicers to grant trial modifications without documentation, which resulted in a backlog of trial modifications awaiting documentation
• Limited marketing efforts on behalf of Treasury

The report notes the vulnerability of HAMP to borrowers re-defaulting on their loans and recommends that Treasury take steps to reduce the risk of re-default, such as addressing the problem of negative equity (or underwater mortgages) and considering a borrower's non-mortgage debts when calculating affordability. 
 
Read the report