Obviously I'm a broken record on this subject, as with so many, but Mike's question, are servicers dumb or corrupt, should also be about the people in Treasury who were responsible for HAMP. They themselves answered previously that they were corrupt, oddly, though sadly I think they were also dumb. If their goal was to help the banksters, I think we'll also eventually realize that they did a really poor job of that, too.
Keeping people in their homes should always have been the goal, and smart people should have set up a reasonable incentive system of carrots and sticks, with that lovely $50 billion budget, to do this. Foreclosures are incredibly costly, both for the people getting kicked out of their homes and the surrounding communities. They're also costly for the investors. The servicers are supposed to act as their agents to maximize their revenue streams, but the short term incentives at least seem to push servicers to just foreclose on everyone, whether or not it's in the best interests of the investors.
