Obama's mortgage modification program may be finally reaching its end

A program designed to help American homeowners stay afloat during the tsunami of foreclosures is starting to take on water, according to a committee of Washington Republicans assigned to overseeing White House programs.

Announced not long after it became readily apparent that a major national financial crisis was at hand, the Obama Administration’s Home Affordable Modification Program, or HAMP, offered mortgage lenders financial incentive for restructuring customers’ payment plans. Many people enrolled with the hope that it would divert the fast moving flood of sub-prime mortgage failures. It served as only a temporary levy, however, as a large percentage of participants became entangled in nets of poorly organized processes, confusing paperwork and uninformed staff.

Eventually, many were denied the promise of a long-term mortgage modification.

With the turn of control in Washington as a result of November’s elections, Republican officials are expected to carefully scrutinize many of the President’s recession-protection strategies. Given its performance record, HAMP makes for an ideal early target.

The team of House members assembled to monitor Washington programs is called the House Oversight and Government Reform Committee. Darell Issa, a Representative from California and the group’s top Republican, sees the incentive program as another example of superfluous government intervention.

"This program seems to have outlived its usefulness," he said recently.

Maintaining a stable household is considered by much of the country as a sign of financial independence. As the economy flourished before the recession, home ownership became commonplace under a number of easy loan programs powered by their prospect to be re-sold around the world in bundles as single investments. Unknown to the American public, mortgages became a commodity and thus, were priced accordingly.

Obama’s HAMP program, revealed with much fanfare, was poorly planned from the get-go. Rolled out in a hurry as more of a band-aid than stitches. To date, the plan has helped around 500,000 homeowners with temporary modifications, but only a small percentage of those with temporary modifications were ultimately approved for permanent modifications, leaving many further behind on their mortgage than when they started the process.

The overall state of the economy hasn't helped much either. Incessant unemployment has prevented much of the country from being able to sustain any sort of income level that could handle even a modified mortgage.

Furthermore, HAMP is being associated with the growth of the robo-signing controversy that is continuing to erode the financial industry’s attempts to kick-start home lending. With a louder voice in Washington, Republicans are assigning Democratic regulators blame for not paying enough attention to the foreclosure industry.

The Office of the Comptroller of the Currency is the government agency in charge of overseeing the activity of our nation’s largest banks.

In a recent hearing on Capitol Hill, it was, essentially, balled out by Representative Robert Goodlatte. "Can you explain how the OCC, which regulates the large banks that are at the center of this controversy, failed to detect that there were foreclosure documentation issues well before this turned into a crisis …”

Julie Williams, Chief counsel for the OCC, didn’t have much of a response. "In hindsight, if we think about the volume of transactions that were going through the process, we could have been more suspicious.”

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