HAMP considered a failure
It has been a rocky road for the Obama Administration as their Home Affordability Modification Program (HAMP) comes under fire as the economy continues to sink. HAMP is a $75 billion program designed to lower borrowers’ monthly payments by reducing mortgage rates and extending loan terms.
A year after the launch of HAMP, only 750,000 of the projected 3 to 4 million borrowers have completed the application, and only 7% (65,000) of those signed up have actually completed the program, causing some to call the program a failure, according to the Star Tribune.
HAMP is said to lower borrowers’ credit scores and because paperwork was being lost and delayed for HAMP applicants, the White House sent “swat” teams into mortgage servicing offices to oversee the process, meanwhile Representative Barney Frank opined that the process had him “terribly frustrated” back in December.
Treasury Department “stepping it up”
This month, the Treasury Department (which oversees HAMP) vowed to “step up efforts” with HAMP which presumably begins with the recent announcement that they have issued new guidelines to help the HAMP program become more effective.
These new guidelines mean that at the time of application, borrowers must present three things:
- a form requesting a loan modification
- authorization for the servicer to get tax information from the IRS (rather than borrowers providing copies themselves)
- evidence of current income, such as two recent pay stubs
The Treasury is noting that by not just taking borrowers’ word (that their finances are in order, or that loan servicers will collect the paperwork in a timely manner) is no longer good enough and that the process will not begin until all three items are complete.