WASHINGTON (TheStreet) -- The Obama administration is taking steps to modify its mortgage-assistance program, following the lead of banks who have taken matters into their own hands.
On Friday, the government said it would adjust the Home Affordable Modification Program and other federal programs to reduce principal, issue new loans to underwater borrowers who were previously excluded, and offer assistance to unemployed homeowners, to allow them to keep paying their bills. The Treasury Department will fund its renewed effort using $14 billion from its $75 billion foreclosure-prevention fund, which has been panned as largely ineffective, and stalled for over a year.
The administration's moves follow the lead of big mortgage lenders like Bank of America (BAC) (Stock Quote: BAC),
On Wednesday, Bank of America announced perhaps the largest private effort to
(BAC) (WFC) (JPM) The administration was defensive on Friday, just days after a watchdog harshly criticized HAMP's progress. Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, said Obama's team was using a "meaningless" standard to measure performance -- of offers extended, rather than borrowers helped.