Is HAMP a Colossal Failure? What Is Next for Homeowners Seeking Loan Modification?
The Obama administration set a goal to help 3 to 4 million American homeowners.
HAMP has only helped a tiny portion of that goal and has not reached the vast majority of American homeowners feeling the effects of the mortgage crisis.
The Congressional Budget Office estimated $72 billion in Troubled Asset Relief Program money would be available to fund HAMP.
Recently the Congressional Budget Office provided that HAMP would end up costing taxpayers $22 billion.
It would seem that servicers are collecting fees from the HAMP program without providing permanent loan modifications to distressed homeowners at the expense of all taxpayers.
To top it all off, on Tuesday March 29, 2011, Congress voted 252 to 170 in favor of ending HAMP altogether.
President Obama has provided he will veto any attempt to end HAMP and whether the Senate will agree with Congress to end HAMP still remains to be seen.
Most likely HAMP will continue as a program that gives hope to distressed homeowners but does little to actually successfully modify their loans permanently.
Has HAMP Helped Direct Loan Modifications From Servicers? According to statistics released by servicers and the Treasury Department the number of loan modifications services issued on their own and not according to HAMP number 4 to 1.
One positive of HAMP is that it arguably increased the number of loan modifications than prior to the implementation of HAMP.
The argument is that servicers had very little incentive to modify loans.
But why are there so many more loan modifications if you seek modification directly from the servicer instead of applying for a HAMP loan modification? One reason seems to be that servicers offer less favorable terms of modification, higher fees that are prohibited by HAMP and the servicer loan modification has a higher rate of repeated default.
So What is Next? The HAMP program should be revised to make the loan modification process more transparent and implement mandatory structured procedures for mortgage companies and servicers to follow.
Simply asking for documents and then continually asking for more information gives homeowners false hope.
Further relief may come from the major mortgage services settling with the government regarding improper transfer of mortgage documents and the resulting improper foreclosures.
Unfortunately for homeowners that have already let their house go and the foreclosure process is complete, there may be no relief at all.