Connect with us

Hi, what are you looking for?

The American GeniusThe American Genius

Economic News

White House tries to improve Home Affordable Modification Program again

An Obama "HOPE" poster is held up at the Democratic Rally in 2010. Photo by: Shotgun Spratling.

An Obama "HOPE" poster is held up at the Democratic Rally in 2010. Photo by: Shotgun Spratling.

Foreclosure prevention program revamp

Last fall, President Obama made a controversial move by bypassing Congress and moving forward with an executive order to fix housing by issuing the second phase of the Home Affordable Refinance Program (HARP) which eliminates fees and appraisal process, along with other adjustments.

This week, the Obama administration announced that they are taking a similar approach seeking to improve the Home Affordable Mortgage Program (HAMP) by expanding eligibility to mortgage holders with higher debt loads and the new phase of HAMP triples the incentives it pays banks that reduce principal on loans, a move the administration has been strongly advocating.

Despite the Federal Housing Finance Agency (FHFA) which regulates Fannie Mae and Freddie Mac asserting in a statement that pincipal reductions at Fannie and Freddie would cost taxpayers another $100 billion, the administration also announced this week that it would offer incentives to Fannie and Freddie to reduce principal on loans which previously was only offered to private entities and banks.

Extending HAMP

HAMP was set to expire at the end of 2012, but has been extended to expire in December 2013 and all new changes will take effect in April. In the most controversial portion of the announcement, HAMP will now apply to owners of rental properties as HUD Secretary Shaun Donovan said in a press event this week is a necessary measure to avoid foreclosures which immediately drag down values in a neighborhood. Some consider this an investor bailout which has already come under fire.

The FHFA responded in a statement by noting it would consider implementing changes to the program, a far different tune than their staunch position against any principal forgiveness. Some form of the administration’s plan will likely be implemented, but it is doubtful that the entire plan as outlined above will make the cut.

Advertisement. Scroll to continue reading.

The new changes would not require new funds, as HAMP has been funded by billions of taxpayer dollars, more than half of which has not been spent. Nowhere near five million homeowners have been helped that the administration promised HAMP would accomplish, so more tweaks have both sides of the aisle skeptical.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

29 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Advertisement

The
American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Advertisement

KEEP READING!

The American Genius is a strong news voice in the entrepreneur and tech world, offering meaningful, concise insight into emerging technologies, the digital economy, best practices, and a shifting business culture. We refuse to publish fluff, and our readers rely on us for inspiring action. Copyright © 2005-2022, The American Genius, LLC.