HAMP is A Failure

http://cop.senate.gov/documents/cop-121410-report.pdf

Today's monthly Congressional Oversight report concluded that for all intents and purposes, HAMP is a failure. Link to the report is here: http://cop.senate.gov/documents/cop-121410-report.pdf So, perhaps characterizing the program in last week's webinar as not longer having credibility in many policy circles was not too risky after all. It not only means the continued experimentation of alternative approaches - mediation etc - but a plaintiff's bar even more aggressive in its litigation strategies in the wake of the foreclosure document problem. Despite criticism of program implementation by Treasury, COP basically lays the failure of loan modification efforts at the feet of the mortgage servicers. Not at all surprising in today's environment:

A major reason [for HAMP's failure] is that mortgages are, in practice, far more complicated than a one-to-one relationship between borrower and lender. In particular, banks typically hire loan servicers to handle the day-to-day management of a mortgage loan, and the servicer's interests may at times sharply conflict with those of lenders and borrowers. For example, although lenders suffer significant losses in foreclosures, servicers can turn a substantial profit from foreclosure related fees. As such, it may be in the servicer's interest to move a delinquent loan to foreclosure as soon as possible. HAMP attempted to correct this market distortion by offering incentive payments to loan servicers, but the effort appears to have fallen short, in part because servicers were not required to participate. Another major obstacle is that many borrowers have second mortgages from lenders who may stand to profit by blocking the modification of a first mortgage. For these reasons, among many others, HAMP's straightforward plan to encourage modifications has proven ineffective in practice.