Revealed: New Book Outs Obama’s Foreclosure Modification Program as Designed to Help Bankers, Not Homeowners
In Neil Barofsky’s new book, ”Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street”, Barofsky details how Treasury Secretary Geithner designed the Home Affordable Modification Program (HAMP) as a way for bankers to spread out their losses, even though the program was trumpeted by the White House as a program to help homeowners.
Barofsky says Elizabeth Warren, now a candidate for Senate in Massachusetts, repeatedly questioned Secretary Geithner about HAMP, and Geithner finally responded, saying, “We estimate that they can handle ten million foreclosures, over time… this program will help foam the runway for them.”
This statement revealed that HAMP was designed to extend the time during which banks would incur foreclosure losses. Geithner knew the banks couldn’t absorb too many foreclosures at once, so HAMP was a way to slow the number of foreclosures, not prevent them. Spacing out the foreclosures was a way of giving banks time to stop losses, and increase their wealth through bailouts. It was never intended, according to Barofsky, to prevent homeowners from losing their homes.
The HAMP program also allowed banks to get a few more payments out of homeowners since borrowers were believing in the program, and trying desperately to save their homes. In the end, banks got a few extra payments, and then foreclosed on homeowners anyway.
Instead of helping homeowners, the HAMP trapped borrowers with extended trial payments, no-doc modifications, and eventually unnecessary foreclosures. This also resulted in many homeowners who’d been current in their payments losing their homes because they sought help through HAMP.
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