The US Treasury Department released a report on August 20 practically admitting that the government-sponsored Home Affordable Modification Program failed on its mission to avert foreclosures by facilitating loan modifications between lenders and distressed homeowners.

Since the start of the global financial crisis in December 2007, more than 2.3 million American homes have been either foreclosed or repossessed by banks and lenders and if economists were to be believed, an additional one million more would join the ranks of the homeless as the wave of foreclosures continue ravaging the housing market.

The treasury report revealed that HAMP was able to process some 1.3 million homeowners for possible loan modifications but as the Associated Press has reported, only 32 percent from those who initially enrolled for the program were able to obtain permanent loan modification to salvage their homes.

The same report admitted that 48 percent of homeowners who availed of the program were eventually released by July this year without getting any solid benefits from HAMP.

Case in point is Michigan, which is one the hardest hit by the real estate storm, where the state government launched the ‘Helping Hardest Hit Homeowners’ in July to help unemployed homeowners from losing their homes.

Economists said that Detroit bore the brunt of most of the devastation as foreclosures conspired with massive job losses and business bankruptcies in battering the city.

The state program, supported by $282.5 million in federal funds, aimed to help unemployed residents who were in the brink of losing their homes but seemed to fall short as many in the state were now labeled as ‘not unemployed, not because they have jobs but because they gave up looking for one.

And for the targeted and qualified 17,000 unemployed homeowners in the state, the Michigan program proved too difficult for actual implementation as most lending institutions refused to dip their fingers into the rescue program, as admitted by the state government itself.

Reports said that Michigan Governor Jennifer Granholm refused to exercise her executive power in forcing a moratorium on foreclosures or even enjoin banks to play their part in the program and instead made a plea to unemployed homeowners to try out giving their lenders a call.

Foreclosure activists called the governor’s actions as utterly inutile as they stressed that homeowners would never get a relief by merely calling on their lenders.

Jerry Goldberg of ‘Moratorium NOW! Coalition to Stop Foreclosures, Evictions and Utility Shutoffs’ stressed on his radio address that the federal-sponsored HAMP and Michigan’s own homeowners’ relief program were bound to fail because the government elected not to put the necessary muscle in implementing the programs.

Goldberg insisted that foreclosures were preferred by banks because they make money through every foreclosure subsidized by the federal government, pointing out that majority of mortgages in the US were now controlled by federal surrogates such as Freddie Mac, Fannie Mae and HUD, with most of these loans grossly inflated from pre-foreclosure value.

He said that as much as $145 billion of taxpayers’ money have been remitted to banks via Freddie and Fannie, adding that the amount could easily reach $389 billion soon as the scheme effectively rewarded the predatory practices of banks for not effecting loan modifications.

In the end, Goldberg asserted that the federal and state governments “have the authority to halt foreclosures, to mandate that banks modify loans and allow people to reclaim their homes at real value and based on payments that they can afford,” yet he stressed that instead of providing aid to troubled homeowners, it is the government which implements most of the eviction incidents.