I have a video explaining how the HAMP program works for consumers. You will see that it is brutal. The main reason it is brutal is the banks do not have to negotiate in good faith. They can simply decide not to agree. The treasury led by our indomitable Phillis Caldwell (twenty years in the banking industry) hasn’t even set up guidelines for the banks to pay back the money they took from the government. So, if the bank voluntarily offered to give the money back, they wouldn’t know how to do it. By the way, it’s almost two years and they still haven’t got the rules in place. Nevertheless, I think their priorities are right where they want them, Consumers second (dead last) and banks first.
Still, Treasury has not yet punished these banks in any significant way. “To date we have not gone back to take back incentives that have already been paid, but we have pursued many of the non-monetary remedies, including further actions and evaluations, and re-evaluations,” Caldwell told Rep. Maxine Waters (D-Calif.), chair of the subcommittee on Housing and Community Opportunity, after Waters repeatedly asked her if she had “levied any penalties or sanctions.”
Even in the midst of a growing controversy over allegedly fraudulent foreclosure paperwork, Treasury has not imposed any penalties on banks.
The difference between how the banks are regulated under HAMP as opposed to how the homeowner is regulated is staggering. The HAMP program simply has no rules for recovering federal money paid to banks who refuse to cooperate. On the other hand, the banks can mercilessly stack fees on the homeowner and foreclose on his home after the trial period. Essentially a bank makes money both by getting federal funds from the program and then forcing the homeowner into foreclosure.
James Pilant
Pilant's Business Ethics Blog 