HAMP’s principal reduction alternative (PRA) is working for nearly 5,000 homeowners, with only 27 of the 4,938 participants in the program falling out and 4,911 principal-modified loans listed by HAMP as active. An additional 16,017 HAMP PRA loans are in trial at this time[1]. Currently, HAMP requirements state that loan servicers must evaluate homeowners applying for modifications for the PRA program but do not require lenders to reduce principal. Furthermore, Fannie Mae and Freddie Mac do not participate in the PRA program. Although HAMP performance still remains far below initial expectations of 4 million homeowners helped, HAMP does have 731,451 permanent modifications on record[2]. With the introduction of PRA, HAMP officials hope to reach more struggling homeowners and help them keep their property. “We have much more work to do to reach the many households who still face trouble and to help the market recovery,” said HUD assistant secretary Raphael Bostic. The U.S. Treasury has criticized HAMP in the past, but recent criticisms for poor performance have hinged on Bank of America, JP Morgan Chase and Wells Fargo issues. The Treasury has accused all three banks of failing to adequately implement loan modification efforts and has withdrawn financial incentives from these lenders. Wells Fargo has publicly disputed and denounced these withdrawals and consistently implemented its own private loan modification programs over HAMP in a ratio of 5 to 1[3].
Do you think that HAMP is still a viable program? Do you think it will, as Bostic believes, ultimately help the economy?
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[1] http://www.dsnews.com/articles/treasury-nearly-5000-hamp-mods-carry-principal-reductions-2011-07-01
[2] http://www.reuters.com/article/2011/07/01/us-usa-housing-hamp-idUSTRE76047U20110701
[3] http://www.housingwire.com/2011/07/01/wells-fargo-private-mods-outnumber-hamp-5-to-1
