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Home Affordability Modification Program failing horribly

HAMP news not a surprise

money toiletThe $75 billion Home Affordability Modification Program designed by the Obama Administration to help struggling homeowners by lowering borrowers’ monthly payments with mortgage rate reductions and extended loan terms. HAMP originally promised to help four to five million homeowners.

HAMP was extended through June 2011 although it was originally set to end in June 2010 and as of February 2010 (one year after the program’s launch), only 220,000 homeowners had received help through HAMP.

Why HAMP is a failure

You think 220,000 homeowners getting help is a victory? Barely an average of 18,000 homeowners catching a break each month? It would be if over 750,000 people had applied, with 530,000 of those in limbo or rejected. It would be a victory if the Administration hadn’t projected four to five million homeowners that would be saved. Foreclosures continue to rise as do bankruptcy filings.

This week, it was announced that a whopping 228,000 homeowners have been helped. That means that since the last FHFA announcement in February, only 6,000 homeowners have been helped. This shows a counterproductive slowdown in applicants being approved for assistance as 18,000 per month were getting help and now under 6,000 per month are seeing help.

What the media isn’t considering:

There is a lot of media coverage of this topic today as all sides of the aisle are disillusioned with HAMP, but no one is asking if the 12 month extension has caused slow down in the system? Is there no longer a rush to help struggling homeowners, or has the program internally been accepted as a failed program? Regardless, HAMP has been a failure and is getting worse.

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Lani is the COO and News Director at The American Genius, has co-authored a book, co-founded BASHH, Austin Digital Jobs, Remote Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.



  1. Missy

    April 15, 2010 at 8:51 am

    I have done my best to get home loans modified in MI. To no avail.

    I just skip right over it as I can’t find anyone in my sphere that has been successful.

    I would love to read just ONE success story.

    I sent a person to a local HAMP counselor last week, they left more confused than ever.


  2. X.

    April 15, 2010 at 3:28 pm

    There are two basic problems with HAMP: 1) Treasury can’t serve two masters, and 2) nobody’s come up with a big enough carrot to move the donkey.

    In re 1, it’s the Treasury department which is in charge of HAMP (which is partially being funded by TARP). In dealing with the HAMP program, Treasury’s goal is to help homeowners keep their homes. But one of Treasury’s other jobs — one of its biggest jobs — is making sure the banking system doesn’t fail, like it did back in the great depression.

    Keeping homeowners in their homes means finding a way to cut down their monthly payments — an in order for that to happen, somebody’s got to lose money, namely the banks. But Treasury can’t force the banks to accept too many losses — they’re already weak and if the lose more money they might fail and have to get bailed out, and we know how much taxpayers _love_ bailing out banks.

    Confronted with this problem, what Treasury and the Obama administration have done is basically made HAMP an all-carrot, no-stick program: HAMP offers different fees and sweeteners and kickbacks that are supposed to tempt the bank into offering a mod — we’re talking a few grand per loan, or maybe a couple percent of interest. But for the most part, banks don’t _have_ to cut the homeowner’s monthly payment. If the bank looks at your application and figures that you’re gonna have trouble paying even if they do cut you some slack, they don’t have to offer a mod.

    Of course, the biggest stick of all is foreclosure itself — Treasury probably figured banks know they’ll lose money in a foreclosure, so they’d be willing to step up if they smoothed out the process and, like I said, provided a few carrots. But the carrots just aren’t big enough for a lot of these loans — the homeowners just have way too much debt overall for a cut of a couple hundred bucks in the monthly payment to make a difference. And since nobody’s pushing the banks too hard, that’s mostly what they’ve been offering. Not to mention the fact that most banks are completely overwhelmed with the volume of troubled loans — there’s tons of Kafka-eqse bullshit going on where the end up foreclosing just because hey, mods are Department X and foreclosures are Department Y….

    But if you really want to know about it, google Elizabeth Warren’s March Congressional Oversight Report. It’s pretty readable, for a government study. And it think HAMP is crap…

  3. drwho314159265358979

    August 26, 2010 at 11:55 am

    The HAMP is a scam.

    The initiative lowers monthly payments for borrowers, but fails to reduce their overall debt burden, often increasing that burden, funneling money to banks that borrowers could have saved by simply renting a different home.

    The HAMP allows foreclosures to be spread out over time, ensuring that banks are not hit with too many at once.

    There is a flip-side to the current HAMP nightmare, one that borrowers faced with mortgage problems should attend to closely and discuss with financial planners. In many cases, banks don’t actually want to foreclose quickly, because doing so entails taking losses right away, and most of them would rather drag those losses out over time. The accounting rules are so loose that banks can actually book phantom “income” on monthly payments that borrowers do not actually make. Some borrowers have been able to benefit from this situation by simply refusing to pay their mortgages. Since banks often want to delay repossessing the house in order to benefit from tricky accounting, borrowers can live rent-free in their homes for a year or more before the bank finally has to lower the hatchet. Of course, you won’t hear Treasury encouraging people to stop paying their mortgages. If too many people just stop paying, then banks are out a lot of money fast, sparking big, quick losses for banks — the exact situation HAMP is trying to avoid.

  4. t.t.

    September 17, 2010 at 10:06 pm

    this bailout is b.s. the only people who kept the money were the banks and the bailout money is so the bank doesn’t have to fire sale the property and take as large as loss as they normally would in a foreclosure. there are the loan servicing companies that are handling the loans and there are the attorneys that represent the banks. the loan servicing company offers a discount on the property for a fee. the attorney representing the note holder says it’s a scam. so, you don’t pay the fee to the loan servicing company for the large discount, the loan servicing company contacts the attorney and the attorney forecloses. who wins? the loan servicing company does if the homeowner pays the fee. the attorney who forces the issue by convincing the borrower they are being scammed by the loan servicing company. in my part of the country, the foreclosures are being discounted only 10% off the regular price. that in itself, tells it all.

  5. Regina Hairston

    December 9, 2010 at 3:05 pm

    I have tried over and over again with my loss mitigation department in using the HAMP program and continued to be denied. I finally received a letter still saying I was denied but if I was going to pre-qualify for the program I needed $3035.08 sent by July 13, 2010, which I managed to send on July 1, 2010.

    I again received a notice that I was still denied, but please continue to send my budget information with any increase or decrease of my financial situation. I DID THAT! I than begin to ask what happened to the $3035.08 I had sent…noone knew and would get back with me…never happened!

    My house has been sold back to the bank as of 10/25/2010, because Loss Mitigation said they HAD NOT heard from me since JULY! Now I am ordered to get out of my house by January 25th 2010! I have no where to go! Now What! I was told by a representative of Loss Mitigation I should have been talking to the foreclosure department after I was denied the first time…who new! what a scam! I am praying the foreclosure department will help me and my family will make me an offer to stay in the home or else we are on the street. In the meantime….Loss Mitigation receive my money and kick me out of my house without help!

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