The Home "Affordable" Modification Program: Curdled Government Cheese

Barack Obama's policies have consistently proven to be such epic disasters, it sometimes makes me think the GOP could nominate a piece of driftwood for President in 2012 and still win the electoral college in a landslide.

Then I remind myself that not everyone is paying attention.

And I weep.

President Obama’s beloved foreclosure-prevention scheme, the Home Affordable Modification Program (HAMP), was a fraud from Day One: It is designed to do nothing but camouflage the effects of the housing meltdown. It is based on bribery — paying the banks to modify (or pretend to consider modifying) mortgages that they really had no business or interest in modifying. And administration of the program was entrusted to Financial Public Enemy No. 1: Fannie Mae, the government-sponsored enterprise that did so much to inflate the housing bubble in the first place while enriching its politically connected executives and committing a sustained campaign of outright financial fraud. An economically meretricious bank-bribery scheme run by a known criminal organization: That’s the foundation of the Obama administration’s housing strategy.

This was guaranteed to go bad in a hurry, and it did. Republicans now want to kill the program, and they should, the protestations of our tax-dodging treasury secretary and the Obama administration’s feckless economic team notwithstanding.

HAMP often is criticized for the fact that the great majority of the people who receive temporary (“trial”) modifications under the program ultimately are rejected, receiving no permanent modification of their mortgages. The critics suggest that this is a shortcoming of the program, the effect of bureaucratic ineptitude and governmental inertia. That is poppycock: The fact that most of the temporary modifications will never become permanent modifications is a built-in feature of the program, the economic incentives of which all but guarantee that outcome. The program is, to be blunt, a scam.

You really should read the whole thing.

I wonder if there is even a single homeowner out there whose dire fiscal situation hasn't been made even worse by this wonderful program.

Cross-posted.