We’re kicking off Giving Tuesday early this year! Your donation today will be matched up to $10K, doubling your impact! If you donate $50 today, the Reader will receive $100.

The Reader is now a community-funded nonprofit newsroom. Can we count on your support to help keep us publishing?

At this point, I had to stop our conversation to make sure I understood. Homeowners were paying the banks money—this new somewhat lower payment that they had negotiated—definitely for three months, but maybe as long as nine months, and that money wasn’t actually going toward their mortgage? Potentially thousands of dollars going into some shadow account the homeowner may never see again?

Yup, says Donohue.

Over at the Chicago Reporter, Megan Cottrell asks: “But when people are waiting months just to hear if they’re approved, paying money while not reducing their principal and maybe even losing their home anyway, is this process really helping homeowners? Or is it another bailout for the banks?”

As far as I can tell, there are two theories. One is that the administration decided that the best approach to mortgage mods was to ask the lenders really nicely to participate, in order to appear to be doing something without alienating them, and you can guess how well that worked out.

The second, and not necessarily exclusive theory, is that HAMP was intended less to aid homeowners than it was to aid banks by preventing too many foreclosures at once, not to prevent the foreclosures at all.

After the jump, former Reader contributor turned Olbermann/Maddow backup Chris Hayes talks HAMP on the Rachel Maddow Show (from 7/30).