Big fat HAMP
The 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?
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”.
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.
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!
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.