From the U.S. Government Accountability Office, www.gao.gov

Transcript for: Watchdog Report:  Implementation of Treasury’s Home
Affordable Modification Program

Audio interview by GAO staff with Mathew Scire, Director, Financial
Markets and Community Investment

Associated Publication Number: GAO-10-556T

Released on: June 24, 2010

[ Background Music ]

[ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and
information from the Government
Accountability Office. It's June 24, 2010. In 2009 the United States
Treasury created the Home Affordable
Modification Program, or HAMP, to help struggling homeowners reduce
their monthly mortgage payments. A group led by
Matt Scire, a Director in GAO's Financial Markets and Community
Investment Team, recently examined the status of
HAMP's major initiatives. GAO's Scott Golden sat down with Matt to learn
more.

[ Scott Golden: ] What exactly is the Home Affordable Modification
Program, or HAMP, and what are its main goals?

[ Matt Scire: ] The HAMP program is a $75 billion federal effort to make
mortgages affordable for families that are
either in default or face the prospect of defaulting on their mortgages.
It's part of the larger TARP program, and
TARP provides $50 billion of those $75 billion.

[ Scott Golden: ] What did GAO find were some of the major challenges
facing the HAMP effort to mitigate
foreclosures?

[ Matt Scire: ] There are a number of challenges. In our most recent
report, we focus on the treatment of borrowers
and there we report on how the lack of specific guidance can result in
inconsistent treatment of borrowers. We also
have reported since last July issues concerning capacity on the part of
Treasury as well as the servicers that
actually carry out the loan modification.

[ Scott Golden: ] I know that the relationship between the various loan
servicers and the borrowers enrolled in HAMP
is a key issue related to the program's success. Could you talk a little
bit more about GAO's findings in this area?

[ Matt Scire: ] Yeah, and this goes back to that challenge regarding
consistent treatment of borrowers. What we
found and we met with 10 servicers that represent over 70 percent of all
eligible borrowers. What we saw was that
some servicers use different standards for when they would first contact
a borrower to inform them about the HAMP
program. Sometimes they would call a borrower after they missed a
payment for 30 days; some would wait until 60
days. We also found that there was inconsistency in the judgments that
were made as to whether a borrower who was
current on their mortgage but was very likely to default in determining
whether or not they would be eligible for
the program. We also saw inconsistency in how they handled complaints.
With some servicers, they tracked all
complaints, some servicers tracked only a subset, and so there was lack
of clear guidance from Treasury to the
servicers as to when to track complaints, how to judge whether or not a
borrower should be considered in imminent
danger of default, and also when to reach out to borrowers.

[ Scott Golden: ] What mechanisms are being used to gauge how HAMP is
being carried out?

[ Matt Scire: ] The principal mechanism right now is a monthly report
that Treasury puts up on its Web site. There
are also three different organizations that have been established by the
act to provide oversight. There's GAO of
course, and we've been preparing reports every 60 days on the TARP
program, and HAMP is part of the TARP program.
You also have the Congressional Oversight Panel, which reports
periodically on activities of TARP, and of course you
have the Special Inspector General for the TARP program, who's also
involved in looking at the HAMP program.

[ Scott Golden: ] Can you discuss the recommendations GAO is making then
to improve the implementation of HAMP?

[ Matt Scire: ] There are a number of recommendations that we make in
this report. First, there are areas within the
guidance which are just not specific, and so we make recommendations
that Treasury provide greater specificity on
defining, for example, when you should consider that a borrower is in
imminent danger of default. We also make
recommendations for greater specificity in the guidance. We also think
that there's more that Treasury can do in
holding servicers accountable. And there we have in mind that Treasury
could do more to specify what sort of
benchmarks or goals that they expect servicers to meet. Also, right now
Treasury has not yet specified the
consequences for a servicer who is not complying with program
requirements. There, we recommend that Treasury do so.

[ Music ]

[ Narrator: ] To learn more, visit GAO's Web site at gao.gov, and be
sure to tune in to the next edition of GAO's
Watchdog Report for more from the congressional watchdog, the Government
Accountability Office.