The Trib‘s Mary Ellen Podmolik had a good piece Saturday about a Bellwood family that tried to reduce their home payments through the HAMP program and ended up worse off for having done so. The really jaw-dropping part is how they paid a reduced rate under a trial modification, and are now considered 13 months behind on their old rate, which kicked in after the modification was rejected.
In the bigger picture, which is composed in part from pieces like Podmolik’s, this tracks with what I’ve been hearing about the HAMP program for several months now. Not only are people arguing that it has been generally ineffective in what it was theoretically intended to do—reducing mortgage payments owed by homeowners throughout the country in an attempt to forestall a wave of foreclosures, which are not only expensive but devastating for neighborhoods and property tax revenues—it’s also screwed a lot of people who chose to participate.
David Dayen at Firedoglake has been doing a fantastic job profiling homeowners like the Bellwood couple. ProPublica has a lot more. And today CNN reports that a special inspector looking at HAMP and other Treasury alphabet soups took a chair to the program in a report to Congress.
Update: Plum forgot about this post:
Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least. There were murmurs among the bloggers of “extend and pretend”, but I don’t think that’s quite right. This was extend-and-don’t-even-bother-to-pretend. The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks. Policymakers openly judged HAMP to be a qualified success because it helped banks muddle through what might have been a fatal shock.
*”HAMP’d” copyright Duncan Black.