Today, the Government Accountability Office (GAO) released a report (GAO 09-837) entitled, “Treasury Actions Needed to Make the Home Affordable Program More Transparent and Accountable.” This report is the sixth in a series of reports required under Section 106 of the Emergency Economic Stabilization Act, which requires the GAO to release a report on TARP every 60 days.
Specifically, this report focuses on Treasury’s efforts to establish the Home Affordable Modification Program (HAMP) and examines (i) the design of HAMP’s program features with respect to maximizing assistance to struggling homeowners, (2) the analytical basis for Treasury’s estimate of the number of loans that are likely to be successfully modified using TARP funds under HAMP, and (3) the state of Treasury's efforts to implement operational procedures and internal controls for HAMP.
In order to improve transparency and accountability of HAMP, the GAO recommended that Treasury:
- Consider methods for monitoring compliance with and the effectiveness of HAMP’s counseling requirement.
- Consider methods of (1) monitoring whether borrowers with total household debt of over 55 percent of their income who have been told that they must obtain HUD-approved housing counseling do so, and (2) assessing how this counseling affects the performance of modified loans to see if the requirement is having its intended effect of limiting redefaults.
- Reevaluate the Home Price Decline Protection Program (HPDP), to “ensure that HAMP funds are being used efficiently to maximize the number of borrowers who are helped under HAMP and to maximize overall benefits of utilizing taxpayer dollars.
- Implement a procedure to “routinely review and update key assumptions and projections about the housing market and the behavior of mortgage holders, borrowers, and servicers that underlie Treasury’s projection of the number of borrowers whose loans are likely to be modified under HAMP and revise the projection as necessary in order to assess the program’s effectiveness and structure.”
- Prioritize staffing vacant positions in the Homeownership Preservation Office (HPO), including finding a permanent Chief of Homeownership Preservation, and evaluate HPO’s staffing levels and competencies to ensure that they are appropriate to fulfill HAMP governance responsibilities.
- Quickly finalize “a comprehensive system of internal control over HAMP,” to ensure that government interests and taxpayers are protected and that HAMP objectives and requirements are being met once loan modifications and incentive payments begin.
- Quickly develop a procedure to systematically assess servicers’ ability to meet HAMP requirements during program admission so that “Treasury can understand and address any risks associated with individual servicers’ abilities to fulfill program requirements, including those related to data reporting and collection.”