January 31, 2011 (Chris Moore)

Rep. Darrell Issa (R-Calif) and Rep. Jim Jordan (R-Ohio) introduced legislation to end the Home Affordable Modification Program (HAMP). Issa, the chairman of the Oversight and Government Reform Committee, and his colleagues said the Treasury Department’s program to help troubled borrowers avoid foreclosure has been a bust. This comes on the heels of a report recently released by the Special Investigator General for the Troubled Asset Relief Program (TARP), who was unsparing in its criticism of HAMP.

The Inspector Generals report said HAMP “continues to fall dramatically short of any meaningful standard of success.” It said that while HAMP has been a boon for those fortunate enough to obtain a loan modification, it described its achievements as “remarkably modest” and said any hope for achieving its original goals are slipping away.

Originally predicted to assist 3-4 million homeowners, the program has resulted in only half a million permanent modifications to date, the report noted. The Congressional Oversight Panel has estimated that number will only rise to 700,000-800,000 if current trends hold.

According to the Treasury Department, about 522,000 homeowners were enrolled in HAMP loan modifications and were making payments on time as of the end of last month. Meanwhile, about 793,000 homeowners have dropped out of the program. That is about 54% of the nearly 1.5 million who have enrolled since spring 2009.

The move by Republicans highlights a mounting political problem for the Obama administration’s’ troubled efforts to attack the foreclosure crisis. The administration has been criticized from both sides of the political spectrum with Republicans calling it a waste of effort.

“HAMP is a colossal failure,” Jordan said in a press release issued by the committee. “In many cases, it has hurt the very people it promised to help. It’s one more example of why government interference in the private sector doesn’t work and that’s why it should be repealed.”

Tim Massad, the Treasury Department’s acting assistant secretary for financial stability said, “I think this program can still help a lot of people. It’s constructed so that we only use taxpayer funds prudently and wisely. To the extent that we do help people, I think it’s helping the right people.”

However, Issa had a different view of the program.

“It’s unacceptable that Treasury continues this misguided effort that appears more focused on saving face than helping troubled homeowners,” Issa said in a press release.

Tags: HAMP, treasury department, loan modification, mortgage assistance, issa, foreclosure crisis, homeowners, permanent modifications, private sector, government interference