In a recent sampling of 60-day (or more) delinquent mortgages, Bank of America determined that only 14 percent of them could qualify for a permanent HAMP loan modification[1]. As Republicans in Congress take aim at HAMP and other government-sponsored homeowner assistance programs, numbers like these – in conjunction with the high costs of running such programs – are likely to make many think twice about keeping them around. And while the White House is threatening to veto bills that eliminate housing relief, more and more people are starting to question the efficacy of these programs[2].
In total, HAMP has permanently modified 600,000 loans – far short of the projected 4 million originally slated to benefit from the program. BofA reports that 28 percent of the loans studied fell out of the program almost immediately because the lender could not get in touch with the borrower via “110 phone calls and eight customized letters in addition to door-knocking in hard hit markets and hundreds of outreach events across the country.” More than half of the remaining 72 percent failed to pass HAMP underwriting guidelines, and 6 percent of the remainder did not make three consecutive payments under the new terms.
Executive vice president of BofA, Terry Laughlin, describes the position of the lender as one “at a cross roads”: “Despite the loan modification programs [and] our best efforts … foreclosure will be unavoidable moving forward,” he said.
Do you think that HAMP should be replaced with something better or should it be eliminated completely?
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[1] http://www.housingwire.com/2011/03/08/only-14-of-newly-delinquent-bank-of-america-mortgages-qualify-for-hamp
[2] http://thehill.com/blogs/on-the-money/801-economy/148191-white-house-threatens-vetoes-on-gop-attempts-to-nix-housing-relief-programs
don’t get it.. why is a problem a failure when the yard stick to measure it is: if the people that need help don’t pass the criteria for meeting the program… it seems you must change the qualifications for getting into the program if you are really trying to help… 72 % fail to qualify.. a rediculour notion.. can’t pay the mortgage so of course unless you modify to make it affordable.. those same people will not pass the underwriting test.. nuts
It, and most of the “stimulus” theft should be eliminated. The Neighborhood Stabilization Program (NSP) should be eliminated as well. Talk about a complete lack of business sense…NSP is sub-prime mortgages with a twist. The counties grossly overpay for the property, they over improve the property, then sell the property to a sub-prime borrower for a loss on the investment. I witnessed a buyer receiving $80,000 to reduce her mortgage in order for to afford the monthly payments. The sale price was $145,000; her loan amount was based on $60,000. Clearly, she should not be buying a house. How many families that are in a position to buy, but need a “little help” with down payments could have been helped with that same $80,000?
Eliminate it completely before it too turns into another Fannie, Freddie or one of a hundred other poorly run, corrupt government programs.
Where in any stretch of the imagination is the Federal government charged with keeping people in housing they cannot afford, paid too much money for or speculated on? I am not able to find it!
The government at all levels is an entity to provide basic service, that is all. The only reason we are in such financial trouble as a country, is because people decided to listen to politicians, looking for power and control, telling us the government should take care of them from cradle to grave. Not enough money in the world for that, not now, not later, never will be!
Grow up people and stop looking for handouts, they are not free!!
LPBS offered me a HAMP loan mod. All they are doing is playing with the numbers, They lower the intrest rate which lowers the payment then they add the back payments and fees to the back end of the loan along with the apropriate number of extra years( usually 10 extra years) to the loan and you are left with a home that is worth about half of what you owe on it and will never get it paid off even if your property values rise some with time. It is a total rip off in which you are effectly made into a RENTER because your home will never have any equity! My loan was transfered to LPBS from Bank of America who is doing Principal Reductions which is rhe right way to Mod these loans. LPBS is ripping us off. Walk away and give them the keys. Go get yourself a cheap home with owner financing, They are giving them away. Your originator is probably Fannie Mae or Freddy Mac. Write your US Senator and request a “Congressional Inquiry” on your behalf, they will do it if there is any Federal agency involved in any way. Take action and fight back! The only way they will listen is if you force them to.
The latest push from the White House suggests that loan modifications include reducing the principal amount of mortgages. This would accomplish several major goals. It would bring the amount refinanced more in line with the value of the property, reduce payment amount, keep more people in their homes, and help stabilize the housing market.
President Obama said, “We must stem the spread of foreclosures and falling home values for all Americans, and do everything we can to help responsible homeowners stay in their homes,”
Bruce Marks, from the Neighborhood Assistance Corporation of America suggested taking it one step further and believes lenders should simply forgive the debt. His statement is based on the concept that the banks have already been paid for bad loans through bailouts, and should not be allowed to foreclose on the property, resell it – and get paid again.
Fairness, regarding those who have been paying their loans, remains an issue of contention.
According to Marks, the deals banks have been offering delinquent homeowners makes walking away more appealing. It is a practice called “Strategic default”.
Modifications that only offer a fixed rate for 3 years are common and do not include a reduction in principal amount. After the fixed rate expires, rapid rises in the interest rate will once again make the home unfordable, and homeowners fear they will be right back where they started from. Currently, default rates on loan modifications are over 50 %.
Without cooperation from lenders to offer mortgages that make as much sense to the homeowner as it does to the lender, the foreclosures will go on, home values will continue to decline and the economy will continue to sink.
Dear B of A, I am very good at math. My friend’s house is underwater. Here is how you can make your job so much easier, so you’ll have more time for the Golf Course. Remodify her loan and you get to eliminate all the hassle of foreclosure and all that paperwork. You end up writing off the negative equity ‘anyway’ when you do a short sale. And when you foreclose, a house can sit empty for months or years and you get no payments!! So, Remod her house, go forward and write off the neg equtity, and then you instantly have a new working loan with payments coming to you. That’s what you call SMART BUSINESS. Tomorrow you won’t have ‘that’ same “Thorn in your side” anymore and before long, you’ll be all well and healed again, and so will this nation. Addtionally, people will once again see you as CREDIBLE and a KEEPER OF YOUR PROMISES, instead of seeing B of A as a LYING BANK with no morals. I will now send my friend to you [again] for a loan mod so you can meet your pals for Golf. It’s just being SMART Vs. DUMB I guess. Cheers for now… DC —-
the Banks are very powerful..the only way we can fight them is to MOVE our money out of them.
I have helped people with loan mods. Got some approved and some not. Several clients that were approved realized it is just a band-aid as no principal reduction. Mortgage litigation is what we are focusing on now.