The HAMP Backstory
Earlier this month, the Obama Administration sent “swat teams” into mortgage servicers’ offices to investigate the problem of loans under the Home Affordable Mortgage Program (a $75 billion taxpayer-financed program put in place to curb foreclosure rates) as servicers are blamed for frequently losing paperwork, missing details and failing to complete applications.
With mortgage delinquencies rising, 375,000 borrowers are eligible for permanent loan modifications by the end of December and the Administration wants to make sure the banks make good on granting these modifications. Proof of reluctance to move past trial offer periods is that only 1,711 permanent mortgage modifications had been offered by September.
In response, the House Finance Committee called on the Administration to take action but I think everyone’s busy on a Hawaiian vacation…
That takes us to today…
Today, CNNMoney published a good old fashioned expose on the HAMP recipients noting that their credit scores are mysteriously dropping. It makes sense that creditors may look at HAMP recipients and make a judgment call that they are not currently eligible for their line of credit, but it does not make sense at all for credit scores to be falling, especially given that many HAMP recipients have been told that their credit score would not be impacted.
This creates a serious problem for what some call a failing program and I anticipate that the program will not be scrapped in the next 60 days out of sheer stubbornness on the part of the Administration, but when it does fold, you better bet some serious investigations will be performed.
What does this mean for the real estate and mortgage professionals on the ground? Can our industry in good conscience direct homeowners to the HAMP program?