Warren Calls For Greater Transparency in Mortgage Program

The Home Affordable Modification Program has facilitated 1,711 permanent mortgage modifications, Elizabeth Warren, chairman of the Congressional Oversight Panel, said in her report. In addition, another 362,348 additional borrowers have begun a trial stage in which they can qualify for long-term mortgage relief by making consistent payments of a reduced amount for three months.

All told, Treasury expects to spend $42.5 billion on the program, which it estimates will allow it to support as many as 2.6 million mortgage modifications. Expenditures could rapidly increase, however, if the economy fails to recover and potential foreclosures increase.

Warren's report also noted that the HAMP program could face additional problems because it was set up to deal with homeowners burdened by subprime mortgages. The main problem facing the housing market now, she said, is unemployment, which is making it difficult for people with traditional mortgages to make their payments. Many of those mortgages, however, do not meet the qualification requirements set out for participation in the program.

"It increasingly appears that HAMP is targeted at the housing crisis as it existed six months ago, rather than as it exists right now," Warren said in her report.

In addition, Warren said that a lack of transparency was making it difficult for her panel to reach confident conclusions about the overall utility of the program. She recommended that the Treasury Department release its net present value models, which it uses to assess home values and qualify applicants.