Posts Tagged ‘loan modifications’

Treasury Lowers Expectations For HAMP Program

More than a year after launching HAMP, only 210,000 families have received permanent modifications. This puts the program’s original goal of helping 4 million families far behind schedule and highlights the program’s weaknesses.

So what does the Treasury do? Instead of doing things to improve the program, such as giving it some actual teeth to force banks to cooperate and actually modify loans, the Treasury now says that when it made the original  projection of helping 4 million homeowners, it only meant that up to 4 million homeowners would be “offered” a modification, not that they’d actually receive  one.

The Treasury has revised its projections and claims that HAMP will help 1.5 to 2 million homeowners. It is now pushing the idea of other foreclosure abatement solutions such as short sales where the beleaguered homeowner sells his home for less than the value on the note and finds “more suitable” housing.

It seems the Treasury is adopting the stance of one banker who actually said that his bank only offers modifications. They don’t actually do them. Do we need any further evidence that Treasury Secretary Geithner is  in the pocket of the big banks? Of course, it is not him alone, it is  his entire department. Who, there, is actually looking out for the well-being of the American people who have long been bamboozled by Wall Street and Big Finance?

Black Homeowners 50% Less Likely To Receive A Permanent HAMP Modification, Survey Reveals

foreclosure1 In what is already an under-performing program, a recent NCRC survey discovered yet another disturbing flaw in the Obama Administration’s loan modification program: black homeowners were 50% less likely than white homeowners to receive a permanent loan modification.

Reasons why this might be happening (aside from discriminatory practices) could be unemployment. The black unemployment rate has jumped to 15.8 percent while the national average is 9.7%.

In recent months, the Administration has come to realize that defaults due to unemployment or underemployment are rising and is at last moving on programs to assist the unemployed stay in their homes. This aid will take the form of forbearance plans that would either reduce the unemployed borrower’s mortgage payments to no more than 31% of their income, or wipe out the payments entirely for a period of no less than three months.  Some borrowers could receive six months of relief under this program.

While it is clear that black borrowers aren’t getting a fair shake, according to the survey, it is also apparent that not everyone who qualifies for a modification is getting one, regardless of race. There is currently plenty of carrot for lenders and servicers, but no stick to go with it, to force the banks to “do the right thing.”

The Myth Of The “Responsible” Homeowner

blame We hear it everywhere, even President Obama says it. Only “responsible” homeowners deserve help. Yet, does anyone really know what “responsible” homeowner means?  I don’t think so.

Naturally, there are some situations where no help should be provided, such as for people facing foreclosure on vacation homes or multi-million dollar residences. Such people don’t really need the help since alternatives exist for them that don’t include homelessness and, further, represent a small fraction of people facing foreclosure today.

Other than those situations, everyone else deserves help,  regardless of the circumstances that lead up to the problem. Why? Well, beyond the moral reason that we should help our fellow Americans where we can, it only makes economic sense on the broader scale.

As the foreclosure crisis continues largely unabated by the President’s HAMP program, housing values continue to take a dive. This has a number of effects, including more people becoming underwater on their mortgages, or sinking them deeper underwater, which in itself leads to more mortgage defaults, and you guessed it: more foreclosures.  Another effect is that the housing market remains depressed, meaning  new home construction remains dormant and therefore no new construction jobs are available. No new construction jobs means no real stimulus to the economy which would spur more consumer spending and create more jobs, which in turn leads to continued high unemployment for everyone.

While not the sole problem facing our economy, the foreclosure crisis remains a major threat to any sort of meaningful recovery. We need to tackle it in order to set the economy back on track. This means we need to stop trying to assign blame and just fix the problem.

At the end of the day, does it really matter that a low income family bought a home they never should have qualified to buy in the first place? Does it really even matter who is at fault or who has the greater share of fault? The result is still the same: another family out on the street, another foreclosed home driving property values down further, another nail in the coffin of our economy.

HAMP To Include Assistance To Unemployed Borrowers and Incentives for Principal Reductions

HAMP logo In a welcome move, the Obama Administration announced changes to its Making Home Affordable loan modification program today that would provide incentives to servicers and investors to reduce principal balances and would provide assistance to unemployed borrowers.

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Bank Of America’s Modification Efforts To Include Principal Reduction

stop foreclosure The nation’s largest mortgage lender, Bank of America announced this week that it would start including principal reduction for some homeowners.  Bank of America customers could receive up to a 30% reduction in their mortgage loan balances. 

Most principal reductions will be confined to Country Wide loans where the loan balance exceeds the home’s value by 120%, where the loan is 60 days or more delinquent and where the borrower can show hardship. 

This move dovetails with the changes to the HAMP program announced by the Obama administration today to include incentives for principal reductions and assistance for unemployed borrowers.  Details about the changes to HAMP can be found here.

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