Obama HAMP program enabling banks to commit massive fraud with taxpayer $$$

[brentspeak]

Essentially, Obama's HAMP program works like this: give the banks billions of taxpayer dollars to "encourage" them to honestly renegotiate homeowners' underwater mortgage terms so that homeowners can avoid foreclosure. The result?

http://www.news-press.com/article/20110130/RE/110129012/1076/Loan-modifications-burn-many-homeowners

Loan modifications burn many homeowners

McClatchy News Service • January 30, 2011

MINNEAPOLIS — Many people who sought help under a federal program created to keep them from losing their homes are instead saddled with huge, unexpected bills.

Thousands now face a stark choice: Go deeper into debt, or foreclosure.

Lenders routinely approved short-term “trial” loan modifications that reduced payments for desperate borrowers under the umbrella of the Obama administration’s Home Affordable Modification Program. But lenders continued to count the mortgages as delinquent or in default.

Now instead of granting permanent modifications, lenders often are reinstating the original loan terms and demanding big back payments.

http://www.bnet.com/blog/financial-business/foreclosure-express-why-the-feds-let-banks-get-away-with-murder/10083

Foreclosure Express: Why the Feds Let Banks Get Away With Murder

By Alain Sherter | January 28, 2011

Big banks that participate in the Obama administration’s main program to combat foreclosures have, appropriately, drawn fire for failing to help struggling homeowners by lowering their mortgage payments. But the largely untold part of the story is why the government is so reluctant to force these loan servicers to comply with http://www.bnet.com/blog/financial-business/how-to-spin-a-failing-program-as-a-success-the-treasury-and-hamp/7213">the federal Home Affordable Modification Program, or HAMP.

ProPublica has the goods, and it will make your blood boil. Ignoring calls by lawmakers of both parties, consumer advocates and even its own staff, the http://www.propublica.org/article/loan-mod-program-crippled-by-lax-oversight-and-deference-to-banks">Treasury Department refuses to punish financial institutions that blatantly violate HAMP, according to the nonprofit journalism outfit. The agency has imposed no fines or other penalties, such as withholding the “incentive” payments servicers get for modifying mortgages through the program. It has no written policy for handling violations. Treasury, which once vowed to sanction financial firms that didn’t play by the rules, now even contends it has little power to do so:

In fact, despite issuing public warnings for more than a year about imposing penalties, the Treasury Department told ProPublica this week they don’t even have the power to punish servicers for wrongfully denying help to homeowners. Instead of toughening the program, Treasury has actually loosened it in the face of industry lobbying.

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Treasury’s dismal record of fighting foreclosures comes awfully close to complicity with the financial industry. To that end, agency chief Tim Geithner also has argued against even a temporary slowdown in foreclosures in wake of the “robo-signing” scandal.

Incredibly, in broken-clock fashion, the HAMP scandal has prompted the House GOP to do the only useful thing it has ever done in the past 30 years: http://www.huffingtonpost.com/2011/01/28/hamp-repeal-house-republicans_n_815508.html">urging that the HAMP program be scrapped. However, corrupt Republicans are also unlikely to demand that http://www.truth-out.org/071709H">mortgage cramdown legislation -- which would actually reduce foreclosures without costing a dime of taxpayer money -- be passed by Congress and signed by the President instead. So between bought-off Republicans and Wall Street-advised Obama, the American people are between a rock and a hard place.