Consumer Law

HAMP Homeowner Bailout . . . money goes to banks, mostly

By Alan White

On November 30, Treasury finally began reporting how much it is actually paying out for foreclosure prevention to various banks and servicers  (HAMP Incentive Payments 11-30-10).    So far $728 million has been paid out to encourage mortgage modifications and prevent foreclosures.   Of that total, less than $100 million has gone to homeowners.  Nearly half the money was paid to servicers (mostly banks), and about 40% was paid to investors holding the mortgages (in many cases, banks).   This relative trickle of homeowner bailout spending, one-tenth of one percent of the TARP bailout budget, turns out to end up mostly where the rest of TARP money ended up:  going to the banks. 

Meanwhile, the Congressional Oversight Panel's latest report finds that the Administration's foreclosure relief program has fallen woefully short of its targets, and concludes that the money set aside by Congress for homeowners may never get spent.  The program's failure is partly due to bad program design, but also because Fannie Mae and Freddie Mac, charged with administration and enforcement of the HAMP contracts with banks, have failed in their roles.  Pacta sund servanda.

Full post as published by CL&P Blog on December 17, 2010 (boomark / email).