The Treasury Department could do more to figure out why some struggling borrowers are failing out of the government’s housing relief programs, according to a new report.
A new study from the Government Accountability Office (GAO) found that while the Treasury monitors the failure rates of various borrowers in its housing relief programs, it does not have tools to evaluate why different servicers providing the program on the ground level have varying levels of success. More rigorous oversight could catch reporting errors or misguided servicer practices that make it harder for homeowners to comply with rules of the relief programs.
“Without more fully evaluating servicer data, Treasury may miss opportunities to identify and address servicer weaknesses and assist and retain as many borrowers as possible,” the GAO wrote.
The Treasury has distributed roughly a third of the $38.5 billion in bailout funds set aside for housing relief efforts. And the GAO noted that since 2012, the number of struggling homeowners enrolling in the Home Affordable Modification Program (HAMP) has declined. HAMP was designed to help homeowners modify the terms of their mortgages if they were struggling to keep up with payments. Roughly 1.2 million permanent mortgage modifications have been made under the program, according to Treasury.
The GAO found that the percentage of HAMP participants who redefaulted on their mortgages varied depending on the mortgage servicer implementing the program. For example, as of March 2013, borrowers redefaulted at rates ranging from 13 percent to 19 percent. Better analysis could determine why those numbers vary, and possibly identify ways to help keep some homeowners in the initiative.
The GAO noted that the Treasury has adopted most of its recommendations when it comes to monitoring its housing programs. It also said that Treasury has repeatedly extended the deadline for HAMP to help homeowners avoid an interest rate increase that comes after several years in the program.
In its response, the Treasury noted its ongoing efforts to analyze housing data, but also said it would continue efforts to improve on that front, and consider the GAO’s recommendations.