When I look at the performance audits of the HAMP performed by the Government Accountability Office (GAO), the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the Congressional Oversight Panel (COP), I find a program that has underwhelmed and underperformed, especially when compared to its stated goals and the size of the crisis we face.
When HAMP began, the Department of the Treasury outlined a goal to help between three and four million homeowners avoid foreclosure and stay in their homes. Unfortunately, but unsurprisingly, this big-government solution has not come close to hitting its target. Through more than a year of HAMP, the Administration has only offered 1.3 million trial modifications and a shockingly inefficient number of those trial modifications remain actively permanent (less than 500,000, through June 2010, according to the GAO). To put this number in perspective, over 338,000 homes were subject to foreclosure filings in August 2010 alone.
With foreclosure rates remaining high (and climbing), Treasury and the HAMP clearly are lagging far behind the pace of the crisis. This point was echoed quite forcefully by President Obama’s hand-picked “consumer protection czar,” Elizabeth WarrenElizabeth Ann WarrenBiden looks to shore up lead in S.C. Hillicon Valley: Dems cancel surveillance vote after pushback to amendments | Facebook to ban certain coronavirus ads | Lawmakers grill online ticketing execs | Hacker accessed facial recognition company's database Push for national popular vote movement gets boost from conservatives MORE, in the Congressional Oversight Panel report she authored earlier this summer.  In fact, only 25,000 trial loan modifications were begun under HAMP last month, an extreme slowdown in the program compared both with the prior month and the same period last year.
Perhaps the most troubling issue plaguing the HAMP are the numbers of borrowers that were not helped at all—those who were flushed out of the program altogether, and those who re-defaulted on modified loans.  In the rush to get distressed borrowers involved in the program, borrowers who would later be deemed ineligible were still offered trial modifications, as no documentation to prove eligibility was initially required at the outset of HAMP. As the trial modifications offered these already-troubled homeowners false hope of a reduced mortgage payment, their ultimate rejection from the program forced them not only to pay their original full mortgage payment once again, but also the unpaid balance on months of payments that were incorrectly reduced. For folks who were struggling just to tread water in this treacherous economy, this large obligation was oftentimes enough to sweep them completely under.
For those half million borrowers that came through the HAMP program with “permanent” modifications (“permanent” being in quotes because even those modifications are set to last only five years), nearly 70 percent will re-default on their modified loan, according to Standard & Poor’s, if current trends continue. Elizabeth Warren called the re-default epidemic the “worst form of failure” with the program, as billions of taxpayer dollars would be wasted without helping those facing economic uncertainty stay in their homes.
As dismal as these numbers may be, all hope, however, is not lost.  Consistent with a trend that I have noticed throughout my time as a businessman and government official, the private sector is ably stepping in where big government fails, providing mortgage modifications and helping keep families in their homes.  According to the Hope Now group of counselors, mortgage companies, and industry officials, the private sector has offered more than 9.5 million modifications to homeowners as of their last report in May 2010, with more than 3.2 million of which remaining actively permanent. Additionally, the Hope Now group reports more than 5.1 million non-HAMP workout plans to assist homeowners with repayment, restructuring, and liquidation.  It becomes plain to see that the private sector is offering more mortgage modifications and doing it better than the Administration’s program that it inefficient at best, and downright wasteful at worst.
As my Republican colleagues and I have said many times throughout this crisis, let’s end the ineffectual government programs funded with controversial TARP money and get out of the way of the private sector, which has shown great ability over the course of this crisis in aiding our fellow Americans who are in jeopardy of losing their homes.