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Don't Extend HAMP - End It

Even the OCC wrote in its most recent report, "The decline in new foreclosures and foreclosures in process reflects a strengthening economy, a declining number of serious delinquencies, and an emphasis on alternatives to foreclosures." So, why spend probably another half a billion dollars to extend a program that has not lived up to its expectations? One that has only proven the longer a homeowner is involved in HAMP, the more likely they are to redefault. Even those that receive a permanent modification are getting cancelled at a rate of 14%.

One reason was to align HAMP's deadline with other extended deadlines for other programs like the Home Affordable Refinance Program (HARP), a refinancing program administered by the Federal Housing Administration (FHA). This makes perfect sense. Spend an additional half a billion dollars so a deadline will align with a separate program from a different department. The HARP program isn't even reflected in the SIG TARP report on TARP expenditures anymore. At one time HARP was reviewed along with the Making Homes Affordable program, but not anymore. The Special Inspector General is also worried that an extension of the program could lead to more fraud.

Ultimately, the extension is about saving face. The Treasury is going to spend $18 million in an outreach program to try to convince more homeowners to ask for assistance. The money goes to non-profit groups that will receive $5,000 to kick off the program and $450 for each application, whether it results in a modification or not. This program began on May 1, and the HAMP extension went through on May 30. Excellent timing.

If a homeowner hasn't requested help over the last five years, does it really make sense to spend $18 million to go out and find them? Beg them to apply for help? Pay groups to find them? Only if it will result in the ability of the Treasury to be able to say it helped more people. When the Treasury is pressed for an answer, a spokeswoman could only repeatedly say they wanted to help more people. Really the Treasury only wants to tout the number of people it has reached out to to help, not the number of people that can get approved and can actually stick with the program.

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