Treasury falls short on oversight of $75B foreclosure prevention program

January 27, 2011 03:50PM

The Obama administration’s $75 billion foreclosure prevention program has been widely criticized for its failure to, well, prevent very many foreclosures, and ProPublica has been investigating why the program has come up short. According to the publication, one major factor has been a possible “fatal” lack of oversight by the Treasury Department, which said this week that it doesn’t have the power under the Home Affordable Mortgage Program, known as HAMP, to punish mortgage servicers for denying loan modifications without cause. When the program was launched in 2009, the Treasury had promised to hit lenders with “monetary penalties and sanctions” if they didn’t make moves to clear their foreclosure backlogs. Since then, some officials have admitted that it was essentially all talk. “By every metric, the failure of the largest servicers to carry out the program is obvious,” said Alan White, a law professor at Valparaiso University. But they’re not being punished, he said, because “Treasury staff are preoccupied with friendly relations with the banks. Sometimes it seems the banks own Treasury.” [ProPublica]