Housing Numbers Grim - Thousands Entitiled to Loan Modifications Not Receiving Relief

As one who began chanting the "it's all about housing" mantra back in the summer of 2007, it seems that neither President Obama or members of Congress are on the ball when it comes to making sure that bailed out lenders are passing benefits along to homeowners who are underwater or who have suffered job losses or other economic set backs. As noted before, dealing with lenders endeavoring to assist distressed homeowners, the predominant adjective to describe the Home Affordable Modification Program, also known as HAMP, is utter incompetence if not out right fraud. I suspect most 6th graders would prove themselves more competent than most lender employees allegedly assisting home owners. And the consequences of the failed HAMP program is that the number of foreclosures is continuing to set records. All of which fuel a continuing downward spiral in home values - which sets the stage for yet more distressed homeowners and more foreclosures. First some highlights from Huffington Post and the failure to deliver on homeowner relief even though the lenders have been bailed out themselves:
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Potentially "thousands" of troubled homeowners were denied opportunities to lower their monthly mortgage payments under the Obama administration's signature foreclosure-prevention plan due to servicer errors and inadequate oversight by the Treasury Department, a government audit has found.
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Mortgage servicers failed to comply with basic guidelines, used different criteria to evaluate borrowers, recorded error rates up to six times their established thresholds, and couldn't provide evidence that potentially eligible homeowners had been solicited for the administration's Home Affordable Modification Program, also known as HAMP.
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The errors are partly due to Treasury's failure to issue specific guidelines for servicers to follow, and the administration's lack of quality-control standards. Because servicers aren't required to adhere to the same set of standards, there's a risk that firms aren't identifying practices "that may lead to inequitable treatment of borrowers or harm taxpayers through greater potential for fraud or waste," according to a Thursday report by the Government Accountability Office.
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But even if servicers were fraudulently modifying loans or improperly denying modifications to distressed homeowners, Treasury "has yet to establish specific consequences or penalties for noncompliance," the GAO notes. The department has yet to fine any servicers for noncompliance, according to the report.
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Last Thursday, the House Oversight and Government Reform Committee held a hearing to examine "the overall effectiveness of processes put in place by loan servicers as they implement HAMP and any other loan modification programs that help homeowners avoid foreclosures," according to the panel's announcement. Not a single question was asked about the GAO's troubling findings, according to a transcript of the hearing.
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And what is the result of this incompetence? Home sales that have fallen off a cliff and foreclosures constituting over 30% of all home "sales." Talking about change and promising competence means nothing unless the words are followed by real, substantive action. Here are highlights from CNN Money on the real world in the real estate market:
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According to the National Association of Realtors (NAR), pending home sales fell a whopping 30% in May. Their index, which measures signed sales contracts but not closed sales, plunged to 77.6 from 110.9 in April. It's even off 15.9% from a year ago when the nation was barely emerging from the recession.
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"The pending home sales report is a disaster," said Mike Larson, a real estate analyst for Weiss Research. "Sales fell off a cliff after the tax credit expired. It's the biggest monthly decline ever and the index is at its lowest level since NAR began tracking it in 2001."
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As CNN Money also reported, prices at foreclosure sales are falling at about 70% of full price - thus setting the stage for falling comparables for those seeking to sell their homes and causing prices to fall and resulting in more and more homeowners who owe far more than their homes are now worth:
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Foreclosures accounted for a third of all sales -- and sold at a nearly 30% discount -- during the first three months of 2010.
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According to a new report from RealtyTrac, the marketer of foreclosed properties, 31% of all sales were foreclosures. And homebuyers purchasing those properties paid a whopping 27% less, on average, compared to sales of non-distressed homes.