The Treasury unveiled new changes to the Home Affordable Modification Program (HAMP) that could streamline the process for homeowners.
Archive for the ‘home affordable modification program’ Category
Changes made to HAMP help streamline process
Monday, February 1st, 2010Loan modifications improving but still failing
Tuesday, January 12th, 2010Although the numbers are improving, a third of loans modified by Fannie Mae and Freddie Mac early last year were delinquent after six months.
These loans were modified prior to implementation of Obama’s Home Affordable Modification Program.
DHW asks: Do you think loan modifications are making a difference?
Some see glass half-foreclosed
Sunday, December 20th, 2009Just one day before the Congressional Oversight Panel criticized the government’s loan modification program as outdated and under-performing, HUD secretary Shaun Donovan reported the pace of trial modifications are beginning to exceed foreclosures. “The fact we now have a pace of trial modifications that exceeds the pace of weekly foreclosures is a very important milestone,” Donovan said. “We believe we’ve reached an important turning point.”
Elizabeth Warren, who chairs the panel responsible for overseeing the $700 billion financial bailout program, remains unconvinced. “We’re concerned that not enough foreclosures will be prevented,” Warren said.
USAToday reported the panel’s three major concerns with the government’s loan modification program.
- The kinds of mortgages that will make up growing numbers of foreclosures exceed the program’s eligibility requirements.
- With a goal of modifying only 25,000 to 30,000 loans a week, fewer than half of the predicted foreclosures would be avoided. One in eight homes are currently in foreclosure or default and 250,000 additional foreclosures are initiated monthly.
- Many modifications so far are still in a three-month trial period. As of Sept. 1, only 1,711 homeowners had received permanent modifications under the federal program. And after five years, many will see higher payments.
If you have questions about a loan modification under HAMP, visit the official website.
DHW asks: Do you think loan modifications will continue to outpace foreclosures?
Op-Ed: Treasury should modify loan modifications
Sunday, December 6th, 2009The Wall Street Journal published an insightful op-ed piece by Edward Pinto. Mr Pinto sees two major shortfalls with the Treasury’s attempt to modify delinquent mortgages through the Home Affordable Modification Program (HAMP).
- “The first shortfall is that the program doesn’t provide a clear process to triage the over 7.5 million delinquent loans.”
- “It doesn’t take into account that the primary reason borrowers default is “negative equity.” When a house is worth less than what is owed on it, making monthly payments seems like a waste of money and many homeowners walk away.”
Mr. Pinto categorizes the three types of delinquent borrowers in his article:
- Borrowers with loans for vacation homes or investors. Pinto feels these loans should be identified immediately and, “when necessary, foreclosed on.” ‘Scammers’ also fall into this category.
- Borrowers who can’t or won’t pay their mortgage. Mr. Pinto feels these borrowers should be given incentives to vacate their homes, “either a small amount of cash or the ability to conduct a short sale.”
- Borrowers who have demonstrated an ability and willingness to pay their mortgage. Mr. Pinto writes that these borrowers can be best served “if we stop clogging the system with unqualified borrowers from groups one and two.”
(If you fall into category three, still call your lender for a loan modification using HAMP. With government pressure now on the industry to act quickly, you may find your lender to be more cooperative than in the past. If you fall into category two, contact your lender to request a short sale or deed-in-lieu of foreclosure.)
In October 2008, along with Peter Wallison, Edward Pinto wrote in the Wall Street Journal that government agencies bore a responsibility to “clean up the mess they had made by lowering underwriting standards to satisfy Congress’s desire to increase home ownership.” They suggested “that the loan principal could be reduced by an average of 20% to give owners equity—and with it an incentive to pay their mortgages.” They also suggested that mortgages “be modified to a 5% fixed rate loan with a 20-year term.”
DHW highly recommends that you read this article (this includes you too, Treasury).
DHW asks: Have you applied for a loan modification or short sale? If so, how was your experience?