Mortgage Aid Program Not Working; Foreclosures Piling Up, Watchdogs Tell Senate
Tom Diemer
Correspondent
Posted:
07/21/10
A government program meant to help at-risk homeowners negotiate better monthly payment deals is not working and could even endanger the economic recovery as foreclosures pile up, federal watchdogs told a Senate panel Wednesday.
Neil Barofsky, inspector general for the government's Troubled Asset Relief Program (TARP), said the mortgage aid program has not "put an appreciable dent in foreclosure filings," the Associated Press reported. Barofsky told the Senate Finance Committee the U.S. Treasury Department has ignored demands that clearer goals be set for the Making Home Affordable program.
The program depends on voluntary cooperation from mortgage companies in working out refinancing deals that can reduce the principal balance for sinking homeowners. More than 400,000 households have been helped, the AP said, but about 530,000 more have dropped out of the program.
Elizabeth Warren, who heads a separate Congressional Oversight Panel on the financial relief programs, said, "We have a crisis, and the consequences of not having cooperation from (mortgage) servicers...is felt by this entire economy. We need a program with far more urgency and real teeth in it." She said many mortgage debt collectors make more money when they foreclose than they would in assisting struggling homeowners.
Bailout funds have provided as much as $50 billion for mortgage modification programs,
Neil Barofsky, inspector general for the government's Troubled Asset Relief Program (TARP), said the mortgage aid program has not "put an appreciable dent in foreclosure filings," the Associated Press reported. Barofsky told the Senate Finance Committee the U.S. Treasury Department has ignored demands that clearer goals be set for the Making Home Affordable program.
The program depends on voluntary cooperation from mortgage companies in working out refinancing deals that can reduce the principal balance for sinking homeowners. More than 400,000 households have been helped, the AP said, but about 530,000 more have dropped out of the program.Elizabeth Warren, who heads a separate Congressional Oversight Panel on the financial relief programs, said, "We have a crisis, and the consequences of not having cooperation from (mortgage) servicers...is felt by this entire economy. We need a program with far more urgency and real teeth in it." She said many mortgage debt collectors make more money when they foreclose than they would in assisting struggling homeowners.
Bailout funds have provided as much as $50 billion for mortgage modification programs,