Enforcing the Home Affordable Modification Program (HAMP)

Abstract

In 2009, the Secretary of the Treasury (“the Secretary”) implemented the Home Affordable Modification Program (“HAMP”), a program designed to minimize foreclosures by providing incentives to loan servicers who modify eligible mortgages. Notwithstanding both its design and goal, HAMP has largely failed to achieve its projected impact, due, at least in part, to servicer non-compliance with HAMP’s mandates. Nevertheless, mortgagors who are injured by servicer non-compliance lack legal remedies to force servicer compliance, as neither HAMP nor its implementing legislation provide a private right of action. Furthermore, and notwithstanding an array of governmental reports specifically finding systemic servicer non-compliance, the Secretary has not exercised any available enforcement mechanisms. As a result, unnecessary foreclosures have continued to occur and have continued to occur at a rate inconsistent with HAMP’s projections. As a remedy for both servicer non-compliance and the resulting, negative effect of unnecessary foreclosures, this Article argues that Congress should enact legislation that provides for a private right of action for violations of HAMP.

Keywords: HAMP, TARP, economic recovery, ESSA, non-compliance, servicer, participating institutions, mortgage