Thursday, March 17, 2011

GAO writes up "Making Home Affordable"

Main GAO report here, highlights here, Senate testimony here.

General message: The "Making Home Affordable" Treasury program is awfully slow at working toward its stated goals, which are to rewrite mortgages to make them payable and to prevent foreclosures through short sales or deeds in lieu of foreclosure.

GAO sees a lot of problems at Treasury with sharing and gathering information: private servicers have trouble finding borrowers who might qualify for the program, qualified people may not get invited to apply, people using one aspect of the program may not know they also qualify for another, and "race and ethnicity" data is not always collected, which makes it difficult to check if the aid is distributed fairly.

The report says that when the programs deny or cancel assistance to borrowers -- which happens more often than not in the HAMP program -- they don't pay enough attention to what becomes of those borrowers next.

Also, the smaller "Making Home Affordable" programs that operate alongside HAMP, such as the second lien modification program, have spent only tiny percentages of their money, in part because of the data problems. For example, the second-lien program had spent just $2.9 million out of $133 million allocated as of December 2010.

Check out the National Default and Foreclosure Trends 1979-2010 map on Page 11 of the PDF. Spouse just looked over and said, "It's the Loch Ness Monster."

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