Every new wave of the Making Home Affordable Program (HAMP), as well as every wave of foreclosures, puts the banks in the spotlight in ways they seldom want to be. After many banks received TARP bailouts, some have not acted the way many expected them to, whether they got a dime from the Feds or not.Their Slow Response to the Crisis… HAMP was conceived promptly to meet a crisis, so banks had to prepare to implement it quickly. Participation in the program was voluntary and even banking giants who had developed their own programs for distressed homeowners did not embrace HAMP immediately. Though banks have been paid incentives through all phases of HAMP, they have been slow to process modifications; the government has only paid $50 million. Out of 3-4 million homes that Making Home Affordable hoped to saved, there have been only 170,000 permanent loan modifications so far. There is lots of red tape involved in modifying a loan, but banks are still not set up to handle the waves of foreclosure, despite increased hiring of processing staff. As a result, it takes a long time to process the paperwork that is justifiably involved in changing loans. The Underlying Issues… Banks may be dragging their feet as they, of course, prefer to have borrowers adhere to original loan terms. In their defense, the ownership of these loans is complicated. Many are backed by investors, so multiple investors hold mortgages. How can these investments be valued?  Who loses what and…