BOSTON ( TheStreet) -- President Barack Obama's mortgage-assistance program has been a failure. Now the government is modifying the modification program itself.
The Home Affordable Modification Program (HAMP) has helped only 168,708 homeowners as foreclosures rose to 2.8 million last year. Foreclosures may jump to 4.5 million this year, according to economists. A report released yesterday by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) on the failings of HAMP was dire. Even if the mortgage-relief program eventually achieves 1.5 to 2 million permanent modifications, "the program will not be a long-term success if large amounts of borrowers simply re-default and end up facing foreclosure anyway," the report said. Shortly after taking office, Obama counted on the mortgage-assistance program to bail out homeowners and save the economy from falling into a deeper rut. The jobless rate rose to more than 10% at the end of last year, imperiling more homeowners. Obama's new plan expands Treasury Department and Federal Housing Administration efforts, using money from the Troubled Asset Relief Program, which bailed out big banks including Bank of America and Citigroup. The Obama administration could do a better job of seeing the foreclosure problem and possible remedies through the eyes of homeowners. Consumers' viewpoint may have been lost amid wrangling over financial technicalities. Attitude Pessimism among endangered homeowners likely kept many from exploring their options. Had more people looked into trial-modification programs, the larger pool of homeowners would have spelled greater success. Homeowners with underwater mortgages, whose loans are larger than the homes are worth, are no longer fearing the repercussions of a foreclosure or viewing it in ethical terms. Wall Street abuses and bailouts have fostered an attitude that walking away from an obligation is a legitimate option. There's a defeatist attitude among many who would rather just give up than work through the process of an assistance program. In what may be a chicken-and-egg type of debate, most think in terms of the foreclosure crisis having contributed to the spike in the unemployment rate. There may be no doubt that foreclosures led to shrinkage in housing-related industries. But record unemployment rates are surely feeding that feeling of a continuous cycle of foreclosures.