Mortgage-Crisis Relief: Falling Down on the Job

(MoneyWatch)  A scorecard released today on the progress-to-date of two U.S. anti-foreclosure programs begs the question: Is this any way to run a rescue mission?

A single figure in the Congressional watchdog panel's report speaks to the glaring failure of federally mandated efforts to stem the continuing foreclosure crisis. The Home Affordable Modification Program (HAMP), in which lenders reduce monthly payments to help borrowers hold onto their homes, has succeeded in arranging a total of just 1,711 permanent mortgage modifications this year through Sept. 1.

To fathom how impotent that effort is, there have been more than two-million foreclosures filed in 2009 and one filed still every 13 seconds -- or 6,600 every day, the Center for Responsible Lending reported yesterday.

The loan-modification program did manage to sign up 362,348 borrowers in a three-month trial stage. And the Home Affordable Refinance Program, or HARP, closed 95,729 mortgage refinancings. HARP assists borrowers current on payments but whose mortgages are more than their home is worth secure more affordable loans.

The report from the Congressional Oversight Panel for the Troubled Asset Relief Program, charged with monitoring the $700 billion banking-industry bailout launched under the Bush administration, makes one thing imminently clear: For all the aid that taxpayers extended banks - whose stocks have risen sharply since - the banks in turn have done little to extend relief to troubled homeowners.

The banks need to vastly step up assistance because the foreclosure crisis is far from over, the panel said.

"Rising unemployment, generally flat or even falling home prices, and impending mortgage rate resets threaten to cast millions more out of their homes," its report said. "The panel urges Treasury to reconsider the scope, scalability and permanence of the programs designed to minimize the economic impact of foreclosures, and consider whether new programs or program enhancements could be adopted."

The modest relief extended even under the two existing anti-foreclosure programs could go a long way to keeping stressed borrowers in their homes. If only banks faced greater pressure to do their part -- as taxpayers did for them.

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