Administration plan under fire as home sales plummet 

Worse-than-expected new home sales are drawing new scrutiny to the Treasury Department's oversight of a troubled homeowners' program.

Sales of new, single-family homes dropped 33 percent in May, lower than many analysts had predicted. Median sale prices also were down -- delivering more bad economic news for the White House.

A new government report on the administration's $75 billion Home Affordable Modification Program, meanwhile, showed more people have dropped out of the mortgage assistance program than benefited from it.

President Obama announced the mortgage relief program soon after taking office, and the White House more recently expanded on it, aiming to help up to 4 million distressed homeowners with various forms of assistance.

But of the 1.24 million who enrolled, more than a third have dropped out. In all, about 340,000 homeowners have received help, according to government estimates, while 436,000 have left the program.

Treasury Secretary Timothy Geithner's oversight of the program came under withering review by Elizabeth Warren, chairwoman of the Congressional Oversight Panel monitoringthe Troubled Assets Relief Program, from which the $75 billion mortgage funding was carved.

At a hearing this week on TARP, Warren asked Geithner whether it's time to do over the entire effort, because it appears to have had little effect.

"What do you have to show for it?" Warren said. "Is it time to rethink whether or not a mortgage foreclosure prevention program that is based on a group of servicers whom you describe as having done a terrible job is a program that perhaps should be redesigned?"

The White House frequently touts housing market statistics as a positive economic indicator underscoring how its fiscal policies are working.

The mortgage program, although not directly related to the drop-off in home sales, is nevertheless among the broad range of economic policies instituted by the administration, this one specifically targeting the catastrophic rate of foreclosures.

"I will never stand before this body or any other body and overclaim for what this program is delivering," Geithner told a bipartisan, independent TARP oversight committee chaired by Warren.

He said that contrary to some expectations, the mortgage program was aimed at putting people in homes they could afford, and not keeping them out of foreclosure.

Some applicants couldn't prove their salary requirements for assistance, while others dropped out for other reasons, he said.

"This program was not designed to prevent foreclosures," he said. "It was not designed to sustain homeownership at a level that would be unachievable, imprudent to try and do."

The House Committee on Government Oversight and Reform scheduled a Thursday hearing on the mortgage program; however, Republicans were complaining that no one from Treasury was asked to testify.

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