Barofsky: Obama housing policy risks "meager results"

The Obama administration is struggling to get a hold on the housing crisis and should consider forcing reductions in homeowner payments, a government watchdog said Tuesday.

Neil Barofsky, the special inspector general over the $700 billion financial rescue package, said the foreclosure crisis has worsened since the administration announced new efforts a year ago to shore up the housing market. Barofsky said the 230,000 permanent loan modifications under the program represent only roughly 8 percent of all foreclosures in 2009.

The administration program, "risks being remembered not for catalyzing a recovery from our current housing crisis, but rather for bold announcements, modest goals, and meager results," the report said.

Barofsky said the White House should consider making principal reductions mandatory rather than voluntary.