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November 19, 2010 / marios

The inefficiency of government

Slate magazine has a very informing article about the Home Affordable Modification Program (HAMP). HAMP is the part of the Troubled Asset Relief Program created to help delinquent homeowners perform loan modifications that can help them keep their homes. The interesting part is that a number of fake programs with the sole purpose of defrauding already financially weak families have been sprouting, adding insult to injury.

Apparently, fake programs are better publicized than HAMP. The initial projection was that HAMP would provide relief to at least 4 million homeowners. So far, less than 500,000 have modified their mortgages. Even though banks are required by law to provide relief to all eligible customers, they violate this provision and foreclose even on people who are in the process of modifying their loan. People fall easily for fake relief programs because the government has done a very poor job of promoting HAMP, upholding the law by investigating banks, and cracking down on scams.

This is only one example of inefficient government (another prominent example is Medicare fraud; you can watch a 60 Minutes special on the subject here). How can you keep your trust in the government when they cannot get mortgage relief right even amidst a mortgage crisis?

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