According to a recent U.S. Treasury report, nearly half of all HAMP loan modifications either fail during the trial period or default soon after conversion to permanency. The treasury indicated in its report this was largely because HAMP modifications did not provide sufficient incentive for underwater homeowners to continue to make monthly mortgage payments even after their payments were reduced. However, other analysts, the problem is that these homeowners still are dealing with other debts like credit card debts and unmanageable car loans[1]. Seems like a probable scenario. After all, if your home is on the line because you cannot make mortgage payments then it’s pretty unlikely that you’ve kept up to date on credit cards either. For most people, home comes before unsecured debt!
Not surprisingly, one response to this issue is that HAMP simply is not comprehensive enough. After all, if a person’s entire debt load were restructured, then perhaps they could pay their mortgage. However, what the people making these suggestions fail to factor in is that a lot of HAMP applicants never wanted their home loans modified in the first place. They wanted out. And the only way for most people to get to get to HAFA or any other short sale on a primary residence with a mortgage from a major bank right now is to attempt the loan modification first and fail. Frustrating and pointlessly time consuming? Yes. Necessary? Yes again.
If we really want to help HAMP participants and homeowners who are trying to keep up other payments because they do not feel that their mortgage payment is a viable, elective payment at this time (and for now, the obligations inherent to a mortgage are not the issue at hand), then we need to establish a way for homeowners who have no intention of succeeding in their HAMP payments to bypass the process. This would lessen the toll on lenders and expedite those properties’ reentry into the housing market rather than creating a massive program failure – and less than half success is a failure – and a shadow foreclosure inventory just waiting to fall on lenders’ heads everywhere.
[1] http://247wallst.com/2010/06/16/another-dagger-into-housings-heart-defaults-rise/
Bryan,
Again, you’re right on the money. We need more government control!
And I have some beach front I’d like to sell, just outside Phoenix.
Brian,
Another good post of relevant content. I agree 120%. HAMP has been a dismal failure. Allowing homeowners to bypass the program would also prevent the banks from going further underwater from missed payments during the sometimes very drawn out HAMP process. However, your argument may be entirely too logical for some….).
I agree with the author.
I have been preaching for years now, to STOP using credit cards. CANCEL all of them now. This has been nothing more then another way for Corp. America to control prices of product, while at the same time, keeping their costs low and profits high. Doesn’t anybody watch CNBC or CNN/ If you do then I am sure you have seen the stories an how the banking industry manipulates interest rates and fees to the tune of billions of dollars in “STOLEN” profits. Why in the hell are people so DAMN GULLIBLE? SHEEP being LED to SLAUGHTER.
People have to know how to do things correct. If they go into the HAMP program they must also do a debt settlement program
We need ZERO government control. Less government and not more is what America needs. The market place will set the stage for what works and what doesn’t. Law of supply and demand.
Another one of your “brilliant” conclusions. So in essence you’re advocating strategic defaults. Pure genius. And of course, once these folks did that, you’d blame Obama for that too.
Your incessant whining about this administration is so annoying. It’s obvious you don’t realize how much it makes you look like a spoiled little girl who didn’t get her way. Now you’re gonna hold your breath until you’re blue in the face.
Just one of a number of reasons I have a hard time respecting men from the south. Y’all claim to be real men and down to earth but in reality you’re petty, incompetent whiners.
Go ahead and censor that one too, coward…
To all of my liberal friends who absolutely disagree with me, but still manage to do so in a civil manner: You might consider reigning in people like this guy Jay. With friends like this guy, who needs enemies? — Bryan Ellis
There are two groups on this mess. The honest hard working family and the foolish don’t give a hoot group. For the honest hard working family who was trying to live out the american dream…we are so sorry you find yourself in this mess. I have met many great families who have used up their credit, their 401k, their life savings and borrowed money from their family trying to do the right thing…keep their house payments current. These are the families who need help.
For the foolish don’t give a hoot and now need a bailout FU! Greed will get you every time. How is the Hummer, do you have nice memories of your Hawiian vacation, been using the jet skies lately? Is the piggy bank empty? BooHoo! These are the people who should be held accountable.
HAMP was a train wreck out the gate. The government and their posturing will not solve this problem. It’s unfortunate that good people are hurting and will have to give up thier homes. The market has to correct itself and it can’t with the government standing in the way. These politicians have no clue what the hard working family is going through. Many of these politicians live in different neighborhoods than you and I. Their kids go to different schools, they don’t drive themselves to work, they have never run a successful business or held a position outside of governement for too many years. They surround themselves with other politicians so how can they really know what is best for the people. They live in theory, they point fingers and they blame others when their laws and solutions fail. To say that their wasn’t enough financial relief or incentive for the homeowner to keep making those modified payments…duh! They are out of touch with reality same with some of these struggling desperate homeoweners. You can’t pay a bill if you don’t make enough money. And for those stragic default people, what goes around comes around. You’ll pay more in the long run.
By the way HAFA is a train wreck waiting to happen!
HAMP was not designed to help the homeowner. Lenders are receiving thousands for each loan modification with Taxpayer’s money along with a partial monthly mortgage payment from the homeowner. Giving the banks time to find an exit strategy.
This is for Jay who must be another Obama follower. Obama the commander in thief.