WASHINGTON (Reuters) - The U.S. Treasury’s outgoing bailout watchdog took his last shot at the Obama administration’s program to keep Americans in their homes and questioned whether taxpayer funds should continue to be used for an ill-conceived housing plan.
There is “near universal agreement that the program failed to meet its goals” and the current debate centers “mostly on whether the program should be terminated, replaced or revamped,” said Neil Barofsky, the top government auditor for the $700 billion bank bailout fund, in prepared remarks to Congress.
Barofsky, who will leave as the Troubled Asset Relief Program’s Special Inspector General at the end of March, is due to testify before a Congressional housing subcommittee. His testimony was posted on the House Financial Services housing subcommittee’s website on Tuesday.
House Republicans are trying to kill the administration’s Home Affordable Modification Program (HAMP), which was designed to help provide permanent loan modifications for distressed homeowners.
The program provides cash incentives to mortgage servicing firms to lower monthly payments for borrowers to no more than 31 percent of their income. So far, it has only provided relief for 521,630 homeowners in the nearly two years of operation.
Treasury initially predicted that HAMP would help 3 million to 4 million at-risk homeowners avoid foreclosure.
“HAMP has been beset by problems from the outset and, despite frequent retooling, continues to fall woefully short of meeting its original expectations,” Barofsky said. “Treasury, it seems, stands alone in defending the status quo,” he said.
Treasury, for its part, has defended HAMP and has said it has helped keep people in their homes.
Separately, New York University Law School announced on Tuesday that Barofsky will become a senior fellow on April 1. In addition to working with programs on criminal and business law, he will tech a course in the fall on the government response to the financial crisis, the school said.
Reporting by Rachelle Younglai; Editing by Kenneth Barry