New documents obtained by ProPublica through the Freedom of Information Act provide new insights into what a complete disaster the Home Affordable Modification Program (HAMP) has been. HAMP was created with $50 billion from TARP funds and was supposed to facilitate mortgage modifications by reducing monthly payments for potentially millions of stressed homeowners. But the Treasury apparently had little or no real oversight of the program that was rife with problems.
I strongly recommend people read the entire ProPublica article, but here’s an example:
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.
The documents also reveal that government auditors signed off on GMAC loan-modification denials that appear to violate the program’s own rules, calling into question the rigor and competence of the reviews.
The fact the program suffered from very poor oversight shouldn’t come as a surprise to anyone who has been following David Dayen’s Portrait of HAMP Failure series, but the documents provide new insight into how poorly Treasury carried out the program.