Struggling homeowners were supposed to receive $46 billion of federal aid under the 2009 Troubled Asset Relief Program, but a new auditor’s report shows that only 10 percent of funds from various federal housing programs under TARP have actually found their way to borrowers.
Federal dollars seem to reach big banks just fine, but spending on the Home Affordable Modification Program (HAMP) — the lynchpin of the Obama administration’s foreclosure prevention efforts — has been slow. Just $3 billion of the $22.7 billion obligated at the end of June has been spent, according to the report.
HAMP has been a remarkably lackluster program since its inception, with more borrowers getting booted out of it than receiving mortgage modification. Three years after its creation, fewer than one million homeowners have received a permanent loan modification. What’s more, many homeowners who enter the HAMP program end up owing back fees and late penalties to the bank if they fail to obtain a permanent modification.
According to Bloomberg News, HAMP is just the tip of the iceberg when it comes to federal aid failing to reach homeowners:
One program, which allocates $2.7 billion in TARP funds to encourage lenders to write down or eliminate second liens when refinancing properties insured by the Federal Housing Administration, has not resulted in any removals of second liens, the report said.
The Treasury Department has allocated $8.1 billion for a program to allow borrowers who owe more than their homes are worth to refinance into loans insured by the FHA. Of that, $6.6 million has gone for administrative expenses, and 1,437 borrowers have benefited, the report said.
The U.S. auditor’s report also criticized the Treasury Department’s bungling of an aid program meant to assist families in states with the largest home-price drops. Of the $7.6 billion allotted for the program, only $351 million had been spent by the end of June.