Foreclosure aid not so helpful

WASHINGTON – The Obama administration’s foreclosure-prevention effort has been ineffective in tackling the foreclosure crisis, the watchdog for the federal bank bailouts said Monday.

Neil Barofsky said Treasury officials are falsely claiming that the program has helped more than 1.3 million homeowners, even though fewer than half of them have received permanent changes to their mortgages through the government’s plan.

About 729,000 homeowners who were initially accepted into the program to have their mortgage payments lowered have been disqualified through September, the Treasury Department said Monday. That’s about 53 percent of the nearly 1.4 million who were enrolled in the program over the past year. And it’s up from about 680,000 a month earlier.

Roughly 467,000 borrowers, or 34 percent of those enrolled in the program, have received permanent loan modifications and are making their payments on time.

Barofsky, the inspector general for the $700 billion Wall Street rescue, said Treasury claims it has “helped” everyone who entered the program – even those who later fell out.

The adminstration “is either hopelessly out of touch, or it’s really a cynical attempt to try to define failure as success,” he said in an interview.

Barofsky’s report also disclosed for the first time that the two other pieces of the housing-assistance plan have fallen flat.

The main Obama plan was designed to help people in financial trouble by lowering their monthly mortgage payments. Homeowners who qualify can receive an interest rate as low as 2 percent for five years and a longer repayment period. The average monthly payment has been cut by about $500.