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Treasury’s Housing Program: “Big Hat, No Cattle”

Posted by Larry Doyle on April 21, 2010 12:04 PM |

High five to 12th Street Capital for pointing out the quarterly release of the Special Inspector General for the Troubled Asset Relief Program. While this report covers a wealth of topics, let’s zero in on the SIGTARP’s summation of the Treasury’s HAMP (Home Affordable Modification Program).

As our friends at 12th Street write:

Ultimately, the report goes on to focus on HAMP and I would say this sums it up best:

“In sum, until Treasury fulfills its commitment to provide a thoughtfully designed consistently administered, and fully transparent program, HAMP risks being remembered not for catalyzing a recovery from our current housing crisis, but rather for bold announcements, modest goals, and meager results.”

I’m guessing Neil Barofsky doesn’t get the invite to too many D.C. cocktail parties.

Let’s zero in on a major problem within the HAMP and that is the potential for fraud. I strongly encourage American taxpayers to read pages 138-140 of this report which focus on this critically important topic. I am happy to highlight what SIGTARP writes on how the HAMP has the potential for massive frauds:

“The lack of clear guidelines and some features of the revised programs themselves leave HAMP vulnerable to fraud. Criminals feed on borrower confusion and frequent changes to the programs provide opportunities for experienced criminal elements to prey on desperate homeowners who have not been educated to the risks of fraud. For the existing HAMP program, this has been demonstrated by the high incidence of mortgage modification schemes, where thieves trick borrowers into paying upfront fees for modifications that never materialize……Although the announcement of the new programs was done with great fanfare, little was done at the time to warn borrowers about the dangers of potential fraud, which is particularly dangerous given the current ambiguity in many of the programs.”

That statement, boys and girls, is known as “big hat, no cattle.” To the extent that you are looking for a mortgage modification, be exceptionally careful.

And we expect our government to oversee healthcare, which is somewhere in the vicinity of 50 times the size of this housing initiative?


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