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Banks and the U.S. Treasury Point Fingers Over HAMP

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  • William Matz | | 02 Sep 2012, 01:31 AM Agree 0
    The recent revelation by former TARP Inspector General Neil Barofsky that Treas. Secy Geithner privately admitted that HAMP was about delaying foreclosures to protect the banks, not about helping homeowners probably explains a lot of the lack of recent success. In 2008, Sheila Bair estimated that FDIC could successfully modify 75% of the delinquent mortgages in FDIC bank takeovers. Yet HAMP has done less than 20%, which tends to confirm Geithner's comments.

    The bank excuses are transparently weak. 2 complicated? If banks hired other than partly trained monkeys, they could do the job. There were lots of unemployed mortgage folks who would have needed little training. After all, running the NPV calculation takes all of five minutes, and gathering the necessary input data should take no longer than 1-2 weeks. Yet all too often borrowers languish in mod limbo for 6, 12, 18 months or more, often learning then that the calculations are still not right.

    We might have had more sympathy for the banks if it was just a problem with the HAMP workload. But the robosigning scandal revealed that the banks had little regard for foreclosure law compliance. Recall that the San Francisco Recorder's 2012 study found serious errors in 84% of foreclosures. So it seems that the rush to foreclosure is at least partly motivated by the banks' desire to cover up as much old "dirt" as possible.
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