NEW YORK (MainStreet) — Housing reform advocates have spent plenty of time and energy criticizing the federal government’s mortgage-relief efforts during the past few years, focused mainly on the government’s signature housing relief program, the Home Affordable Modification Program (HAMP).

HAMP has had a checkered track record since it was introduced in March 2009, with most of the criticism aimed at the glacial pace of efforts to help homeowners heading into foreclosure. Now, a new government report from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) spells the problem out with greater clarity.

SIGTARP says that HAMP has only spent $2.5 billion of the $45.6 billion allocated to it by Uncle Sam to help financially troubled homeowners modify their home loans and stay out of foreclosure. That’s barely 5% of the funds that Congress has made available, and significantly short of the goals that Congress and the White House had established when the program began.

That problem only grows larger with the fact that HAMP is scheduled to end operations in late 2012. With the clock ticking and HAMP operating in first gear when homeowners need it in fourth gear, the SIGTARP report estimates that about 600,000 homeowners who were expected by government officials to be aided by HAMP won’t get that help – and could well wind up in foreclosure.

SIGTARP has long been critical of HAMP, and the new report is a continuation of that trend. Back in March 2011, Neil Barofsky, special inspector general at the agency, testified in front of a congressional committee that HAMP’s “failed trial modifications often leave borrowers with more principal outstanding on their loans, less home equity, depleted savings, and worse credit scores.” He added that there was “near universal agreement that the program has failed to meet its goals” and that “there is little reason to hope things will get better.”

Data released by Senator Jim DeMint’s (R-S.C.) office shows that through the first quarter of 2011, the private sector has done a much better job of moving homeowners through home loan modifications than the government has. According to DeMint’s office, the private sector had completed about 9.8 million mortgage modifications from 2007 through the first quarter of 2011. In comparison, HAMP had only recorded approximately 500,000 loan modifications during the same time period.

The SIGTARP report does say there is still enough time to help more Americans get a loan modification deal through HAMP, if – and it’s a big “if” – the 112 active mortgage servicers and the Treasury Department get their act together and better coordinate HAMP services for struggling homeowners. Poor written communications and confusing trial loan modification terms and timetables are at the top of that list, the report says.

“With less than 1 million struggling borrowers remaining eligible, and a window quickly closing on the end of the program, Treasury must double its efforts to ensure that servicers comply with program requirements,” SIGTARP reports.

If not, millions of American homeowners could wind up paying a big price. Ultimately, says the SIGTARP report, “it is struggling homeowners who have the most to lose.”

If you are one of the many American homeowners looking to refinance a mortgage, be sure to first do your homework so you know how closing costs and appraisals affect the new bottom line!