One of the government's bailout watchdogs, the Congressional Oversight Panel, has some sharp words for the Obama administration's programs to fight forclosures through loan modifications. In a report released today (PDF), the panel said the programs "have failed to provide meaningful relief" and appear to be "little more than window dressing" when it comes to helping desperate homeowners.

The report also raised concerns about the scope of the programs, pointing out that even though the Treasury's stated goal was to offer three to four million loan modifications, the number of borrowers eligible for permanent modifications falls far short of that goal. (Homeowners in the program first get trial loan-mods designed to last three months, after which they're which banks and mortgage servicers are supposed to either give homeowners a permanent modification or drop them from the program.) 

As we've reported, the Treasury has hedged its statements, saying that the 'three to four million' figure was for trial modification offers, and not permanent loan modifications. Its latest estimates are that it will be able to offer permanent help to, at most, 1.7 million homeowners. The panel's estimates are even lower. It predicts that only one million families will receive permanent loan modifications through the Treasury's programs, despite there being six million families more than 60 days behind on their mortgage payments.

"Doubt then emerges as to the attainability of Treasury’s goal," according to the panel's report, "as the scope of borrowers even eligible is roughly half of the target."

The Treasury, in response to the report, continued to downplay expectations.

"As we have said before, these programs are not intended to help every homeowner in trouble," said Treasury spokeswoman Meg Reilly. "We cannot help those who simply bought a home that they could not afford."

But even with the narrower focus, the program is still being executed slowly and ineffectively, according to the panel.

According to numbers released by the Treasury today (PDF), more than 230,000 homeowners have received permanent loan modifications. But by our own calculations, in February, about 475,000 of homeowners have been stuck in the trial modification stage--past the three-month mark for when a final decision on the modification should be reached. Problems with lagging modifications were so common, we offered to match struggling homeowners with reporters looking to tell their stories.

"Quite frankly," the oversight panel's chairwoman, Elizabeth Warren, told Marketplace, "we're concerned that dealing with mortgage foreclosure has simply not been a priority."