The Administration can brag about all the housing programs they’ve put in place. But the truth is that because of HAMP and the other failures on this front, the link between borrowers and their government has been severed. I’m sure there is a large and growing universe of people who won’t take up this program because they’ve been burned one too many times. Or they’ve heard about a friend or neighbor who was burned. The danger from HAMP to liberal notions of government operating as a helping hand hasn’t been fully understood by the technocrats in Washington.This reminds me of the "haircut" issue. The "haircut" issue is this - if you are uncertain about getting your hair cut, you can start conservatively, cutting only a little bit. If that turns out to be too little, you can always go back and trim more. Similarly, in policy making, you can respond to a problem by doing a little bit. If it's not enough, you can go back and do more.
Of course, in the real world, the consequence of doing too little and failing is often that your failure keeps you from doing anything more. Your stimulus wasn't enough? The failure of the stimulus to revive the economy is then used as proof that any stimulus wouldn't work. Similarly, if your homeowner assistance programs haven't worked in the past, maybe you won't be able to persuade homeowners to participate in the future.
The best policy is to get it right the first time.