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Treasury Response to HAMP: Bury Data, Run PR Campaign

photo: bitzcelt via Flickr

With the HAMP program clearly failing, in fact beyond expectations, government officials have closed in on two strategies to react to the problems. First, they’ll try to bury the data, although Shahien Nasiripour won’t let them get away with it.

The Obama administration has revised its latest monthly report on its signature foreclosure-prevention plan, deleting a heavily-criticized performance metric used to measure whether assisted homeowners are re-defaulting on their taxpayer-financed mortgages […]

In an otherwise bleak report on the state of the program — more homeowners have been bounced from HAMP than have received permanent relief — the re-default rate was seen as overwhelmingly positive.

But economists and Wall Street analysts weren’t impressed. In a Wednesday note to clients, Sandeep Bordia and Jasraj Vaidya of Barclays Capital wrote that the data was “misleading.” Celia Chen, an economist and specialist in housing for Moody’s Economy.com, said in an interview that the incredibly low re-default rate “just doesn’t sound right to me.”

The problem they identified had to do with how Treasury was calculating the rate. In the report, Treasury stated that a “HAMP permanent modification is canceled for nonpayment if it is more than 90 days delinquent.” To the Barclays Capital analysts, it appeared that Treasury was thus not including those homeowners with five-year modifications who were kicked out of the program. More than 8,600 homeowners have been bounced from HAMP.

The Barclays analysts said the move made the re-default rate look “too low” and “fail[s] to capture the full magnitude of re-defaults from these modifications.”

To their credit, Treasury deleted the re-default metric after it was proven false. A previous Administration might have just kept spinning the numbers. But honesty does nothing for the quality of the program, which grows worse.

The second thing that Treasury is doing, aside from re-jiggering data, is running an ad campaign:  . . .

In a move designed to encourage more at-risk borrowers to seek help with their mortgages, the U.S. Treasury and the Department of Housing and Urban Development Wednesday announced the launch of a nationwide public advertising campaign to increase awareness about the government’s Making Home Affordable Program.

“We want to do all we can to help make sure that struggling homeowners know about these free resources for help,” U.S. Treasury Secretary Timothy Geithner said in a statement accompanying the announcement.

Sounds great! Let’s design a program that does almost nothing but gouge homeowners, increasing the amount of payments banks can glean from them without lowering their principal or putting them in a position to afford the mortgage, and then promote that program heavily.

If the program helped people in any way, an ad campaign would make sense. Instead, this helps only those banks and lenders with toxic mortgages on their books, allowing them to “extend and pretend” at the expense of the borrower.

I have an idea for improving the program – improve the program.

CommunityThe Bullpen

Treasury Response to HAMP: Bury Data, Run PR Campaign

With the HAMP program clearly failing, in fact beyond expectations, government officials have closed in on two strategies to react to the problems. First, they’ll try to bury the data, although Shahien Nasiripour won’t let them get away with it.

The Obama administration has revised its latest monthly report on its signature foreclosure-prevention plan, deleting a heavily-criticized performance metric used to measure whether assisted homeowners are re-defaulting on their taxpayer-financed mortgages […]

In an otherwise bleak report on the state of the program — more homeowners have been bounced from HAMP than have received permanent relief — the re-default rate was seen as overwhelmingly positive.

But economists and Wall Street analysts weren’t impressed. In a Wednesday note to clients, Sandeep Bordia and Jasraj Vaidya of Barclays Capital wrote that the data was “misleading.” Celia Chen, an economist and specialist in housing for Moody’s Economy.com, said in an interview that the incredibly low re-default rate “just doesn’t sound right to me.”

The problem they identified had to do with how Treasury was calculating the rate. In the report, Treasury stated that a “HAMP permanent modification is canceled for nonpayment if it is more than 90 days delinquent.” To the Barclays Capital analysts, it appeared that Treasury was thus not including those homeowners with five-year modifications who were kicked out of the program. More than 8,600 homeowners have been bounced from HAMP.

The Barclays analysts said the move made the re-default rate look “too low” and “fail[s] to capture the full magnitude of re-defaults from these modifications.”

To their credit, Treasury deleted the re-default metric after it was proven false. A previous Administration might have just kept spinning the numbers. But honesty does nothing for the quality of the program, which grows worse.

The second thing that Treasury is doing, aside from re-jiggering data, is running an ad campaign:

In a move designed to encourage more at-risk borrowers to seek help with their mortgages, the U.S. Treasury and the Department of Housing and Urban Development Wednesday announced the launch of a nationwide public advertising campaign to increase awareness about the government’s Making Home Affordable Program.

“We want to do all we can to help make sure that struggling homeowners know about these free resources for help,” U.S. Treasury Secretary Timothy Geithner said in a statement accompanying the announcement.

Sounds great! Let’s design a program that does almost nothing but gouge homeowners, increasing the amount of payments banks can glean from them without lowering their principal or putting them in a position to afford the mortgage, and then promote that program heavily.

If the program helped people in any way, an ad campaign would make sense. Instead, this helps only those banks and lenders with toxic mortgages on their books, allowing them to “extend and pretend” at the expense of the borrower.

I have an idea for improving the program – improve the program.

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David Dayen

David Dayen