This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Don't Extend HAMP - End It

Stocks in this article: BACWFCJPM

NEW YORK ( TheStreet -- The Obama administration is extending the Making Home Affordable Program even though the program has not achieved its goals and they say the housing market has begun a recovery. Known as HAMP, the Treasury launched the program in 2009, saying it would provide relief to 3-4 million at-risk homeowners, helping them avoid foreclosure. The Treasury brags that 1.1 million homeowners have received permanent modifications, but currently only 862,279 homeowners are in active HAMP modifications and as of March 31, 2013, 312,000 have redefaulted on their modifications.

The Treasury originally committed $50 billion for the program and has since reduced that amount to $38.5 billion and has actually only spent $7.3 billion. However, it has cost the Treasury half a billion dollars ($588 million) to administer the program. So, it spent $682 to give these homeowners roughly $8,400 each. The program was scheduled to end in December of this year, but has been pushed out two more years to 2015, even as Treasury Secretary Jacob Lew acknowledges that the housing market is gaining steam.

Financial Services Committee Chairman Jeb Hensarling opposes the extension. He said rather than extend the failed program, the administration should work with Congress to terminate HAMP, rescind its unspent funds and use those billions of dollars for deficit reduction. Of course, the Treasury Department believes by extending the program, more struggling homeowners will be helped. Unfortunately, the Special Inspector General of the TARP program has not seen long-term favorable results from the program. Redefaults from those in the program the longest are rising at an alarming rate. As of March 31, 2013, the oldest HAMP permanent modifications, from the third and fourth quarter of 2009, are redefaulting at an eye-popping rate of 46.1% and 39.1%.

In its defense, the Treasury Department points out that its redefault rate is lower than other banks and highlights a study done by the Office of the Comptroller of the Currency, or OCC, that supports this. Of course the OCC is part of the Treasury Department and it's obvious the topic of redefaults is a sensitive one since it needed to prove it wasn't so bad. A quick look at JP Morgan's (JPM) recent quarterly filing, though, shows a redefault rate in modifications between the range of 14-27%. Citigroup (C) didn't break out a percentage, but its redefaults in residential mortgages among those that defaulted after modification dropped from $439 million in March 2012 to $236 million for March 2013. Dropping, not increasing.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,828.24 +0.49 0.00%
S&P 500 2,067.56 -5.27 -0.25%
NASDAQ 4,791.63 +4.3130 0.09%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs