Thousands of struggling borrowers likely denied HAMP mortgage mods in error

Poor oversight by the Treasury Department and errors by servicers has led to what may be thousands of homeowners being wrongly denied mortgage modifications under the Obama administration’s Home Affordable Mortgage Program, a government audit has revealed. According to the Government Accountability Office report, “15 of the largest 20 participating servicers [in HAMP] did not comply with various aspects of program guidelines,” when determining which borrowers were eligible for modifications. That determination is supposed to be made based on a calculation using factors like the borrower’s income and equity in the home, but the process is beset with errors, in part because the Treasury Department has failed to issue specific guidelines and standards for servicers to follow, the Huffington Post reported. The number of struggling homeowners rejected from HAMP in error “could range from a handful to thousands,” the report says, and yet the Treasury “has yet to establish specific consequences or penalties for noncompliance,” and has issued no fines. [Huffington Post]