Hard to believe a government mortgage program failing, but, even the Treasury Department finally noticed the HAMP program is failing.

And, of all things, the government found that the mortgage companies were overstating the income of the homeowners trying to save their houses.

Their excuse?  Well, at first, HAMP did not require that applicants document their income.

Give me a break.  Who came up with these rules, Angelo Mozilla?

How the hell do you analyze whether someone should get a modification without knowing their income?

Wells Fargo claims it is down to a 4.5% error rate on income verification.

First, at this point, I don’t believe anything these crooks tell me.

Second, a 4.5% error rate is inexcusable.

They can’t get pay stubs and tax returns?

Balderdash.

The error rate should be close to zero, false only when the bank is lied to.

But it is the banks who are the big liars in the mortgage mess.

Along with Bank of  (everything in) America and JP Morgan, Wells received $24 million for HAMP modifications just last month alone.

Treasury now says they are cutting this off because of the poor performance of the mortgage companies.

Gee, they caused the mess by throwing out all lending standards, lying to regulators and investors, and now the government expects them to be forthright in the HAMP modification process?

Let’s pay the foxes to stop raiding the hen house.

Taylor, Bean & Whitaker is an example of the work the mortgage companies did, until the housing bubble burst and they could not sell their crap anymore.

The feds are asking for a 385 year sentence for the ex-boss of that mortgage company.

“Farkas fueled his lifestyle of ostentatious wealth by ripping off banks and attempting to steal from the government, all with little to no regard for the con”Farkas fueled his lifestyle of ostentatious wealth by ripping off banks and attempting to steal from the government, all with little to no regard for the consequences to TBW’s or Colonial Bank’s employees, thousands of whom lost their jobs when TBW and Colonial Bank closed,”

Please tell me how this differs from how Countrywide, Washington Mutual, and the rest, ran their business?

Please.

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The HAMP program is still not effectively helping homeowners avoid foreclosure.

These statistics are for the 170,000 HAMP modifications already completed.

There have been more than 450,000 foreclosure proceedings started in just the last two months.

For over 75%, the home is still worth less than what is owed on the first mortgage, so foreclosure may be put off, but only short term.

Over half are “seriously” underwater, meaning they owe at least 25% more than the value of their home.

And the average is 35% underwater, for those who have received modification.

That is, even AFTER the HAMP modification, they owe $1.35 for each $1.00 the house is worth.

Which helps who?  The mortgage companies, who do not want to foreclose anyway.

More people are deciding it makes more sense to walk away from a home  that is so far underwater, let foreclosure happen, rather than get a HAMP modification.

And, these figures only count the FIRST mortgage. So, even worse when you count second and third mortgages.

As quoted by Shahien Nasiripour in the Huffington Post:

This is the same song I have been singing on HAMP for a while, 25% of the temporary modifications have been converted to “permanent.”

I use quotes, as a lot of these change the terms for five years, at which time  you may owe more then when you started.

40% of the homeowners who get modifications, default again.

I understand that, most of my clients are so desperate to keep their home, they over-estimate income and/or under-estimate expenses.

The mortgage companies do not want to take their losses on the plunge in home prices.

How can you blame them?

They keep getting the political class to bail them out with our tax dollars.

Even though almost all HAMP modifications benefit them more than the homeowner, the taxpayer is paying them for each modification.

They got us coming and going.

Judicial mortgage modification is a much better approach to the foreclosure crisis.

Foreclosures Still Not Helped by HAMP

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HAMP has failed, but the White House has not given up, and announced a new foreclosure prevention program last week.

HAMP has resulted in fewer than 200,000 permanent modifications, out of the over 1 million people who have tried, and it has been around almost a year.

HAMP was supposed to help 3-4 million.

The most recent version is aimed at 4 million at most.

Hey, if you are going to miss with your foreclosure prevention program, might as well miss big!

The government estimates 12 million foreclosures still could occur in the next three years.

Mortgage payments would be reduced to 31% of the homeowners income, even if that income is unemployment payments.

Not permanently, of course, and no principal reduction required of the mortgage companies.

Not to worry about the source of the money for the $50 billion dollar program, that will be taken from money already approved for foreclosure prevention.

The pitch on this revision is, it will lower payments for unemployed people until they can find a job.

Money will be paid to lenders who cut the balance owed on homes more than 15% underwater, that is, worth that much less than what is owed on them.

Once again, no teeth.

Mortgage companies will be asked to reduce principal balances.

As the Huffington Post notes, in a story by Alan Zibel:

Q. I owe more on my mortgage than my house is worth. Will this help me?

A. Maybe. The program depends on the willingness of mortgage companies to participate. Their track record has been shaky at best.

Hey, haven’t they been asked that already?  For a long time?

And, once more, more money for our friends, the bankers!

Double payment if you modify a second mortgage.

Great.

Banks were actually making deals on second mortgages, knowing they would get nothing on homes that are worth less than what is owed on the first mortgage.

More government interference in the market, why make a better deal for the second mortgage holder, they took more risk by taking a second mortgage in the first place.

This program also encourages short sales, if you do not qualify for a mortgage.

I am married to a realtor, believe me, the short sale process is a time consuming maze, you do not want to go there alone.

Mostly because our friends, the bankers, do not know what they are doing.

And, the FHA, which is already broke, is going to pay our friends, the bankers, for lowering principal balances, on first mortgages only, to borrowers who are making payments.

Prime benefit here goes to the second mortgage holder, if there is one, as any decrease in the amount owed on the first mortgage moves them up the ladder.

Until we get judicial mortgage modification, none of this will work.

Foreclosure Prevention Program Modified Again

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Bank Of America Says Quadrupled “permanent” HAMP Mortgage Modifications.

Of course, it is easier to get big percentage gains when you start with small numbers.

3,200 permanent HAMP mortgage modifications was the starting number here, as of the end of 2009.

No word on how many of these lowered the principal balance, or if the bank just agreed to rewrite how the homeowner was going to pay them back.

“Permanent” HAMP mortgage modifications can change after five years.

As Bank of America bought Countrywide, the #1 offender, I am not sure how many millions of mortgages they hold, or how many tens of thousands of foreclosures they have started.

Some experts are predicting foreclosures to double in 2010.

Estimates of the “shadow inventory”, foreclosed homes banks have taken back, but not yet put up for sale, range from 1.7 to 7 million.

Standard & Poors estimates, conservatively, it says, that it will take 33 months at current rates to get rid of all the shadow inventory.

Which means, more downward pressure on home prices.

HAMP Mortgage Modifications Quadrupled, Says Bank Of America

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If you liked Home Affordable Modification Program, you will love Home Affordable Foreclosure Assistance!

This plan (40 pages long) assists the mortgage companies in getting you out of your house, by short sale, or deed in lieu of foreclosure, which is signing a deed to give your house to the mortgage company, instead of making them go through the foreclosure process, which takes time and money.

There will be more foreclosures on houses like the Detroit Ice House in the picture.

Same old same old on this site, more foreclosures, more homes for sale, further depressing home prices.

First HAMP, Now HAFA!

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Supplemental Directive 10-01 is available at:  https://www.hmpadmin.com/portal/docs/hamp_servicer/sd1001.pdf

From page 1:

A significant program change is a requirement for full verification of borrower eligibility prior to offering a trial period plan. Effective for all HAMP trial period plans with effective dates on or after June 1, 2010, a servicer may only offer a borrower a trial period plan based on verified income documentation in accordance with this Supplemental Directive.

This Supplemental Directive also provides guidance to assist servicers in making HAMP eligibility determinations for borrowers currently in active trial period plans, including those borrowers subject to the temporary review period required by Supplemental Directive 09-10.

This Supplemental Directive provides guidance to servicers of first mortgage loans that are not owned or guaranteed by Fannie Mae or Freddie Mac (Non-GSE Mortgages). Servicers of first mortgage loans that are owned or guaranteed by Fannie Mae or Freddie Mac should refer to the related HAMP guidelines issued by the applicable GSE.

***

Effective for all trial period plans with effective dates on or after June 1, 2010, a servicer may evaluate a borrower for HAMP only after the servicer receives the following documents, subsequently referred to as the “Initial Package”. The Initial Package includes:

Request for Modification and Affidavit (RMA) Form,

IRS Form 4506-T or 4506T-EZ, and

Evidence of Income

(The RMA and IRS forms are available at:  http://www.makinghomeaffordable.gov/requestmod.shtml)

Other changes announced in SD 10-01:

At page 4:

Continued Eligibility for HAMP

A borrower who has been evaluated for HAMP but does not meet the minimum eligibility criteria described in the “HAMP Eligibility” section of Supplemental Directive 09-01 or who meets the minimum eligibility criteria but is not qualified for HAMP by virtue of a negative NPV result, excessive forbearance or other financial reason, may request reconsideration for HAMP at a future time if they experience a change in circumstance.

At page 8:

Definition of “current” under trial plan is defined as the borrower having made each required trial period payment by the last day of the month in which it is due.

H.A.M.P. Program Changes Announced

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Sorry for the lag between posts, the ever popular technical difficulties!

Would have gotten this out sooner, all pending HAMP trial modifications that were set to expire are extended to the end of this month.

This does not help those waiting to hear, who are not yet in the trial period.

The government imposed additional reporting conditions on the mortgage servicers in this new HAMP directive.

They are not even close to keeping up with the existing requirements, so not sure how adding even more will help.

HAMP Trial Modifications Extended To January 31, 2010

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Correcting an apparent oversight, in that FHA mortgages were NOT included in the Home Affordable Modification Program.

By August 15, homeowners with FHA loans will be eligible for the same mortgage modifications encouraged by the HAMP program.

FHA Added To HAMP Program

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Noticed by Diana Olick of CNBC.ocm, the bounce in 30 year mortgage rates from around 4% to 5.5% eliminates any reason for numerous nomeowners to re-finance, because they already have 5.5% or lower rates.

As noted, this rate increase virtually eliminates  the Obama mortgage re-finance plan as a choice.

(Click here if you want to order a FREE copy of my book, The Consumer’s Guide to Defending Foreclosure.)

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