Yesterday, the House Committee on Oversight and Government Reform held a hearing entitled, “Foreclosure Prevention: Is the Home Affordable Modification Program Preserving Homeownership?” The Committee heard testimony from the following witnesses: Panel One:
- Neil Barofsky, Special Inspector General, Troubled Asset Relief Program (SIGTARP)
- Gene Dodaro, Acting Comptroller General, Government Accountability Office (GAO)
- John Taylor, President and CEO, National Community Reinvestment Coalition (NCRC)
- Mark Calabria, Director of Financial Regulation Studies, Cato Institute
- Herbert M. Allison, Jr., Assistant Secretary for Financial Stability, United States Department of Treasury
The witnesses on the first panel focused on the slow implementation of the Home Affordable Modification Program (HAMP). Treasury originally estimated that HAMP could help 3 to 4 million borrowers, but HAMP has resulted in only 168,708 permanent modifications in its first year. Mr. Taylor stated, “While the goal of [HAMP] is laudable, the program has not produced the necessary volumes of modifications.” Mr. Barofsky said that HAMP has been plagued with inconsistent goals and requirements for prospective participants. Echoing the same sentiment, Mr. Dodaro said HAMP has been difficult to implement because there have been numerous changes to the program. Some of the changes “have required servicers to readjust their business practices, update their systems, and retrain staff,” all of which have slowed down the loan modification process.
Mr. Allison, on the other hand, maintained that the program is still on track for its goal of 3 to 4 million trial modifications by 2012, with participants saving on average $500 per month. He stated that the administration was working on measures to encourage “some additional people to participate in this program, who may be unemployed or who need principal reductions.” He acknowledged, however, that “For HAMP to reach its potential, implementation must continue to be improved, servicers must recommit to a better borrower experience and outcomes, and program enhancements must continue.”