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Obama’s foreclosure prevention program has helped far fewer homeowners than expected

When the Obama administration announced a massive effort to help distressed homeowners in 2009, it set high expectations. The program, government officials said, would keep up to 4 million borrowers out of foreclosure.

“It will give millions of families resigned to financial ruin a chance to rebuild,” Obama said at a event announcing the effort. “By bringing down the foreclosure rate, it will help shore up housing prices for everyone.”

Six years later, Obama is preparing to leave office, and the Home Affordable Modification Program, or HAMP, accepted its final applications Friday having helped a fraction of the homeowners government officials initially expected. About 1.6 million borrowers have seen their mortgage payments lowered through the program so far, but about a third of those people eventually fell behind on their payments again.

“The president set out an ambitious goal that wasn’t met,” said Kevin Stein, deputy director of the California Reinvestment Coalition, a housing advocacy group. “It was definitely a step forward and step in the right direction, but … a lot of people ended up falling through the cracks.”

Wells Fargo, which has received $1.8 billion through the program, is eligible for up to $1.5 billion in bailout funds over the next seven years, for example. JPMorgan and Bank of America, which have received $1.9 billion and $1.4 billion, respectively, could receive about $1 billion each over the next few years.

Many of these banks have repeatedly broken the rules of the program, including kicking homeowners out unfairly or making it too difficult to apply for the help, according to the agency.

“While HAMP did not live up to expectations, the most important thing going forward is to protect from fraud, waste and abuse the nearly 1 million people with lowered interest rates in the program and the billions of dollars Treasury will continue to pay to mortgage servicers,” said Christy Goldsmith Romero, special inspector general for TARP.

Article source: http://www.latimes.com/business/la-fi-obama-foreclosure-20161230-story.html

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