Watchdog Slams Home Loan Modification Program

04.14.10 | FL News Team

A federal program to help underwater homeowners stay afloat will likely do more harm than good. A federal watchdog that oversees the bank bailout has issued a report slamming the Obama administration's 75-billion dollar program to modify home loans. The Congressional Oversight Panel said that many of the borrowers who get new loans end up re-defaulting anyway. The report states, quote, "billions of taxpayer dollars will have been spent to delay rather than prevent foreclosures."

 The administration says its Home Affordable Modification Program will help up to four million people by 2012 get their home loans modified at least temporarily. But the oversight panel says, quote, "the goal itself seems small in comparison to the magnitude of the problem." The panel calculates that with the high re-default rate, the loan program would ultimately only prevent about 276-thousand foreclosure. That's less than four percent of the six million loans already in default through February of this year. Some two-point-eight million homeowners received a foreclosure notice last week alone.