Panel: Foreclosure Prevention Program Had 'Less Impact' Than Expected

The government's program to prevent foreclosures is falling far short of its stated goals, a congressional watchdog reported.

The Treasury's Home Affordable Modification Program (HAMP) is likely to fulfill less than a third of its goal of preventing 3 million foreclosures, the Congressional Oversight Panel for the Troubled Asset Relief Program said, according to Bloomberg News.

"The program has turned out to be a lot smaller and have a lot less impact on the housing market than we expected," said former U.S. Senator Ted Kaufman, the chairman of the panel.

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HAMP pays lenders and servicers to rewrite loan terms for borrowers who can't meet mortgage payments. It has struggled to convince lenders and borrowers that it is worth adjusting the loans, with many preferring to simply walk away.

Meanwhile, foreclosures have continued, hammering house prices. As many as 13 million foreclosures are expected by 2012.

"If current trends hold, HAMP will prevent only 700,000 to 800,000 foreclosures," Kaufman said.

The Treasury will spend only about a fourth of its $50 billion budget for the program, according to the Congressional Budget Office.