Government watchdogs: Obama failing to help at-risk homeowners
By Ariana Eunjung Cha
The Obama administration's efforts to aid at-risk homeowners in danger of foreclosure is not working and the Treasury Department shoulders some of the blame, the three government watchdogs for the $700 billion financial bailout told a Senate committee Wednesday.
Despite a seemingly ever increasing array of initiatives under the program that went into effect 15 months ago, the number of homeowners being helped "remains anemic," Special Inspector General Neil Barofsky testified before the Senate Finance Committee. It has "not put an appreciable dent in foreclosure filings."
While the program was expected to help 3 million to 4 million homeowners, only 1.2 million homeowners had started trial to their loans that helped make their mortgages more affordable and 347,000 homeowners had received permanent modifications under the Home Affordable Modification Program as of the end of May 2010.
Elizabeth Warren, chairwoman of a separate panel on the bailouts, said that less than one-half of 1 percent -- $247.5 million of the $47.9 billion dollars committed -- of the money allocated for the program has been spent.
"The program has worked very well for the nation's largest financial institutions. For small banks, small businesses and American homeowners, however, the results have been far more limited," said Warren, who oversees the Congressional Oversight Panel on the bailout program.
All three government watchdogs charged with overseeing the bailout -- the special inspector general, the Congressional Oversight Panel and the Government Accountability Office -- said Treasury's failure to act more quickly is hurting the recovery.
"In the case of small banks we have been urging Treasury for more than half a year now to get ahead of the coming problems with commercial real estate," Warren said.
"Treasury has yet to fully implement several of the recommendations we made in July 2009 to improve HAMP's effectiveness, transparency, and accountability," the GAO's Richard J. Hillman said in his written testimony.
"The program has made limited progress, has suffered from inconsistent program implementation, and continues to confront additional challenges," Hillman added.
Barofsky said part of the problem is that Treasury has refused to provide "meaningful goals" for the program that makes it difficult for Americans and their representatives in Congress to assess whether the benefits are worth the high cost of the program.
In the absence of such standards, Barofsky said, "positive comments regarding the progress or success of HAMP are simply not credible, and the growing public suspicion that the program is an outright failure will continue to spread."
Ariana Eunjung Cha
July 21, 2010; 12:55 PM ET
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