The Obama Administration extends a hand to homeowners. Photo credit: Jeff Turner

A little over a week ago, US President Barack Obama visited Henderson, Nev. For two reasons: One, to give Senate Majority Leader Harry Reid a little campaign push, and two, to show residents of the state hardest hit by the foreclosures crisis that Washington hasn’t forgotten about them.

At the time, Obama announced a plan that would funnel about $1.5 billion in federal dollars to state-based housing programs designed to help Nevadans, and the residents of four other hard-hit states, Arizona, California, Florida, and Michigan, hang on to their homes. The program is aimed primarily at homeowners who are out of work or, as they say in real estate parlance, “underwater”, owing more than their home is worth. Now, The New York Times editorialized yesterday, while it was “good to see Mr. Obama focusing aid where it is needed most”, major concerns remain. Specifically, the current plan isn’t enough to make a significant dent in US foreclosures. Still, the paper said, “it is headed in the right direction, if the administration is willing to set a new course.”

Both The New York Times and The Washington Post used their editorial space this weekend to criticize the existing nationwide foreclosure programme, the year-old Home Affordable Modification Program, or HAMP. HAMP, The Washington Post wrote, took about $75 billion from the Troubled Asset Relief Program to cut individual monthly mortgage payments by up to 31 percent. But, said The Post, the programme “is lagging”: Not only are those the programme is set up to help not getting the aid, but increasing unemployment is driving up the rate of redefault.

“The silver lining is that HAMP and other loan modification efforts at least prevented a cascade of foreclosures at the height of the recession. Things are more stable now, so the economy can probably handle the ‘shadow inventory’ better than it would have a year ago. To be sure, this relatively benign outcome depends on two big ifs: continued moderate interest rates and stable or declining unemployment rates,” the paper concluded. “HAMP has saved fewer homeowners than hoped, but to the extent it helped the housing market make a soft landing, it might even go down in history as a net plus. You could almost call it a successful failure.”

Over at AOL’s Daily Finance blog, however, Zac Bissonnette wrote that expanding HAMP to offer aid to more homeowners, a plan that the Administration is currently mulling over, could do much more harm than good. “Forcing mortgage companies to aggressively court distressed homeowners with information about HAMP – four phone calls and two certified letters – will do little to help most homeowners, and will only burden loan servicers with useless bureaucracy that prevents them from devoting resources to people who need and want help,” he wrote.