Obama’s home loan modification program just surpasses skeptical expectations

The Obama administration’s Home Affordable Modification Program has saved approximately 802,000 U.S. homeowners from foreclosure as of April 2012, slightly exceeding the Congressional Oversight Panel’s expectations, according to the Wall Street Journal. The Congressional Oversight Panel, which monitored the 2008 bailout, had been critical of the HAMP program that gives underwater homeowners permanent loan modifications by paying lenders incentives. It predicted the president’s efforts would only stop between 700,000 and 800,000 foreclosures, adding in a report that HAMP was “unlikely to improve substantially in the future.” Treasury Department statistics released Wednesday showed this forecast to be fairly accurate: as of this March the program had prevented some 795,000 foreclosures and that an additional 7,000 were avoided through April.

Despite the now three-year old program’s modest successes, lack of lender participation – the subject of criticism from both parties — has limited the federal government’s ability to run through HAMP’s $30 billion budget. Thus far it’s only spent $3.23 billion. The Obama administration is now attempting to improve bank enrollment by boosting incentives. However it is also offering benefits for borrowers in equal measure by broadening enrollment criteria and extending the application deadline for an additional year. [WSJ]

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