Mortgage companies enrolled in the Obama administration’s signature foreclosure-prevention initiative may be receiving taxpayer funds despite not having a legal right to the home or to the mortgage, a top Treasury Department official revealed Wednesday.

But despite faulty or missing paperwork, the Obama administration allows mortgage companies to boot homeowners from the program, sticking the borrowers with massive bills that often leave them worse off.

During an oversight hearing, Phyllis Caldwell, Treasury’s housing rescue chief, acknowledged during questioning that Treasury doesn’t know whether mortgage companies and the owners of mortgages are receiving public money under “false pretenses.” Treasury is investigating, she said.

The contradiction highlights what many critics of the past two administrations’ policies have claimed for some time: they exert overwhelming force when it comes to saving financial institutions, but merely modest assistance when it comes to distressed homeowners.

So, let me get this straight, the federal government in this case the Treasury Department, has been kicking hundreds of thousands of people out of their program (HAMP) to keep their homes but the mortgage companies have been getting the money whether or not they owned the homes?

Actual human beings have had to fill out tons of paperwork (my understanding is that the initial application is a seventy page document), provide endless reams of evidence of income, etc., get relatively little aid and more often than not get kicked out of the program.

On the other hand, the banks who have been receiving federal funds (HAMP funds), have not had to prove they owned the property to collect benefits?

At what point, did the phrase, double standard, become the Administration’s sole approach for mortgage foreclosures?

They can’t be troubled to find obvious bank problems but happily squish homeowners for the smallest application fault? Thanks a lot, White House, for lining up with the little guys!

James Pilant