Panel blasts foreclosure prevention program

By J. Scott Trubey and Bob Keefe

The Atlanta Journal-Constitution

The Obama administration’s foreclosure prevention program was blasted in Washington on Tuesday as "ineffective." Struggling metro Atlanta homeowners like Miriam Vincent share the same concerns.

Vincent sought relief through the federal government’s home loan modification program nearly 18 months ago, but has found only misery.

“The government could have made [the banks] more accountable,” said Vincent, 67, of Stone Mountain.

The committee that oversees the loan modification program agrees with her. The Congressional Oversight Panel over the program called it "ineffective" and also criticized the Treasury Department for not holding accountable the big mortgage companies and servicers.

The Home Affordable Modification Program (HAMP) gives mortgage companies financial incentives to modify mortgages for struggling homeowners and gives borrowers incentives to repay the reworked loans and stay in their homes.

Borrowers like Vincent, though, have complained of a baffling bureaucracies, botched paperwork and abuses by banks apparently ill-equipped to handle the crush of struggling homeowners seeking aid.

Vincent and her attorney say she stayed current on three different trial payment plans, but she almost lost her home to foreclosure late last year when she claims CitiMortgage bungled her case. She remains in limbo today.

“These are pretty common experiences of borrowers,” said John Bartholomew, Vincent’s Atlanta Legal Aid Society attorney.

HAMP started in 2009 with a lofty goal of preventing up to 4 million foreclosures, but is actually expected to stop only a third of that number. A little more than half a million have been helped on a permanent basis so far.

Treasury is expected to spend $4 billion on modifications, a mere fraction of what was originally intended. Many borrowers with reworked loans have defaulted.

Republican Rep. Lynn Westmoreland of Coweta County, for one, said he thinks the program should be discontinued. As a member of the House Financial Services committee in the next Congress, he may have a chance to do just that.

Westmoreland said he knows of constituents who have filed the same paperwork five and six times under the program with no answer.

"Why continue to give people these false hopes, only to [make them] more and more frustrated when it's not working?" he said.

U.S. Sen. Johnny Isakson, R-Ga., a former real estate executive, said jobs, not modifications for those unemployed or otherwise unable to pay their mortgages, is key.

"Basically the best solution to the continuing foreclosure problem is to restore employment in America," he said.

Tim Massad, the Treasury Department official who oversees the foreclosure program and other parts of the Troubled Asset Relief Program (TARP), agreed that lenders and loan servicing companies were ill-prepared to help administer the government program. But it has kept 500,000 homeowners in their houses.

"This program has had many critics and there have obviously been many criticisms of it, but I think it's important to recognize what it has accomplished," Massad said.

Vincent said CitiMortgage botched the process three times, claiming in one instance she failed to make a payment and later that it didn’t have records of her application. Citi also claimed at one point she failed to send required documents.

Citi officials, she said, stopped taking her calls and the debt on her townhome is now in the hands of debt collectors. Citi declined to comment because of client privacy concerns.

Vincent, who relies on Social Security and occasional part-time work, said she can pay the modified amount and that Citi would recoup over time every penny she owes. That's far more than it would receive in a repossession.

“I just want them to be fair and reasonable. We’d both win,” she said.