The Government Accountability Office said in a report Friday the Treasury Department is struggling to implement new Making Home Affordable programs and that more transparency is needed. Under the federal plan are a variety of initiatives including the Home Affordable Modification Program, and the Home Affordable Foreclosure Alternatives program, which provides short sales and deeds-in-lieu of foreclosure. Other parts of Making Home Affordable give incentives to servicers for writing down principal, modifying second liens and extending forbearance periods to the unemployed. Each has underwhelmed, though the Treasury insists these initiatives provide the industry a framework, around which banks could build their own private programs. Servicers started 791,399 permanent modifications through HAMP and extended nearly 1.9 million trials. The program is on track to fall well short of the now grossly overestimated 3 million to 4 million borrowers. Since April 2010, servicers completed 12,888 short sales and DILs through July 2011, up from 10,438 the previous month. Bank of America (BAC) HAFA numbers remained the same in the July report. “Bank of America decided to temporarily halt reporting so they can finetune their process,” one Treasury spokesperson told HousingWire.  “They are still completing HAFA transactions although the reporting will be temporarily lagged.” Through the Unemployment Program launched in July 2010, the Treasury reported 13,511 forbearance programs for those borrowers without a job through June. Nearly 11,000 of these home loans still require some payment. Since spiking to 21,277 second-lien modifications through the 2MP initiative in February, servicers have started mods on less than 16,000 second liens since, according to Treasury data. Major servicers implemented 2MP in January. Then there’s the principal reduction component of HAMP launched in October 2010 and available only for non-GSE mortgages. Servicers are urged to evaluate the benefit of lowering the principal on mortgages with a loan-to-value ratio of 115% or higher. Through July, 29,406 of these trials have begun with about 9,200 active. “In March, we reported on the implementation of newer MHA programs, specifically the TARP-funded second-lien modification, foreclosure alternatives, and principal reduction programs,” the GAO said Friday. “Similar to the problems we identified with HAMP, we noted that Treasury has experienced challenges in implementing the newer MHA programs.” Specifically, the GAO recommends the Treasury report activity under the principal reduction program. The agency wants to see which servicers determined a principal reduction was still beneficial to investors but did not offer it. This is “to ensure transparency in the implementation of this program,” the GAO said, adding that the Treasury has only partially implemented its recommendation. In response to the GAO report, Assistant Secretary for Financial Stability Tim Massad said the Treasury is considering further implementing the recommendations. “In the case of the MHA recommendations, which pertain primarily to newer initiatives, we are continuing to assess the operational challenges, impact to borrowers and available resources in determining implementation feasibility,” Massad said. Write to Jon Prior. Follow him on Twitter @JonAPrior.

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