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Home Affordability Modification Program Has Been Extended

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Big fat HAMP

old yellerThe Obama Administration has had a rough go of the Home Affordability Modification Program (HAMP) which continues to be scrutinized and Democrats and Republicans alike call it a failure. This $75 billion program designed to lower borrowers’ monthly payments by reducing mortgage rates and extending loan terms has failed to get even CLOSE to touching the four to five million homeowners that the administration projected HAMP would help (FHFA projects only 220,000 homeowners have received help since the program began).

In true political fashion, if you fail to meet a goal, just move the goal post, right? This week, FHFA announced that HAMP would be extended through June 30, 2011 instead of the originally scheduled in of June 10, 2010.

The idea is sound that homeowners that owe up to 25% more than their homes are worth to refinance at lower interest rates, but the red tape, alleged frequently lost paperwork, poor oversight and the inappropriately long wait time have kept hundreds of thousands of applicants from getting the help they are seeking.

So, if a program is failing horrendously and barely limping along as it is, shouldn’t it just be put out of its misery?

Lani is the Chief Operating Officer at The American Genius and sister news outlet, The Real Daily, and has been named in the Inman 100 Most Influential Real Estate Leaders several times, co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

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17 Comments

17 Comments

  1. Ralph Bell

    March 3, 2010 at 7:57 am

    I’m curious of those 220,000 people how many are already behind on their mortgage? Then I would be able to understand if the program is working or not.

    Of that 75 Billion ear marked for the bailout, how much of it has actually been used to help the 220K?

    I also would be curious to know what is the geographical area of these 220K? Is it spread out evenly in the U.S. or is it concentrated in Florida and California?

    My capitalistic thoughts are end the program now. Let the market sort itself out without government intervention, but my humanitarian side says, “what if I was one of those people the program actually helped”.

  2. Bill

    March 3, 2010 at 1:45 pm

    The author has no idea of the Making Home Affordable Program (MAH). Home Affordable Modification Program (HAMP), which is funded for Modifying the terms of a loan to lower the payment to an amount the borrower can afford – thus keeping the family in the home and the home out of foreclosure, expires 12/31/2012 and is one component of MAH. The other component is Home Affordable Refinance Program (HARP) which is the program statistics quoted by the author and which program was extended as mis-stated by the author. HARP refinances up to 125% of the home value (value have dropped 35% for folks who purchased in 2007) and the intent is to offer folks with good payment histories the opportunity to refi out of a high rate, interest only etc terrible loan to a market rate fixed rate 30 year loan so they don’t get wet feet and walk away because they have negative equity and a loan payment hat is eating them alive. This program is only available to Fannie Mae and Freddie Mac loans. Would be nice for someone with such a strong opinion as ‘putting programs out of their misery’ shouild first know what they are talking about.

  3. Bill

    March 3, 2010 at 7:28 pm

    Guess I should have noticed the author is your Media Director… whoops. I would not have posted had I realized, but rather would have sent a personal note – if possible. Was running out the door and wanted to get the facts out there. Just returned to find not posted – and realized the author bio. Understand if you don’t post – I wouldn’t. Perhaps a new article would be in line. These programs are for the little guy – pushing for Congressional pressure on the Servicers to handle the HARP refis in a timely and reasonable underwriting manner (friend just getting docs into escrow – 4 months of hell) and the HAMP Modifications (totally ignoring Treasury guidelines – in fact a recent encounter with an underwriter revealed she did not even know what a Supplemental Directive was!) instead of hearing most of them complain would be just what these homeowner programs need – some teeth.
    I am not a tweeter etc user so this is the only way I know to respond.
    Good thing you screen comments.

    • Lani Rosales

      March 4, 2010 at 4:37 pm

      Bill, we accept all thoughts an opinions and any facts you have to bring to the table are great! Really!

      The bottom line however boils down to a political promise that HAMP (which is what this article is specifically focused on) was to aid 4 to 5 million troubled homeowners, but only 220,000 have received the aid of this $75 billion program. That alone spells trouble to me, and the far left and far right have cried that it’s a failure (remember, we’re talking about HAMP here and nothing more), and the extension feels a lot like moving the goal post rather than addressing the documented issues of difficult red tape, lost application paperwork and the like, so my question remains: can HAMP be fixed, should it be ended, or is the extension the best option?

      Sidenote: Bill, thank you for commenting. You were moderated only because you haven’t commented before and sometimes it takes time for us to approve commentary. Thanks for joining us, we’ll be writing more about HAMP and other programs and invite you to opine as the stories come along!

  4. Mayven

    August 26, 2010 at 11:58 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.

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.

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young executives

job openings

Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

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The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.

#JobOpenings

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Economic News

Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.

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gas tax

gas-tax

Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.

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Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.

Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.

“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”

Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.

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