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
Popularity: 3% [?]
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
