rssThe Death of HAMP
Friday, September 17, 2010 at 12:22 pm
- 14 Comments
The foreclosure crisis is far from over. Rather, as this chart from Daniel Indiviglio at The Atlantic shows, it is in some ways just peaking. Last month, banks foreclosed on more homes than ever before. More than a million families are predicted to lose their homes this year.
The signature Obama program to ameliorate this crisis was the Home Affordable Modification Program, or HAMP, which helps homeowners modify their mortgages for lower monthly payments.
But the program has proven frankly disastrous — in many cases hurting the families it was meant to help. The administration expected it to help 3 to 4 million homeowners. It has aided a fraction of that, completing just 434,700 permanent modifications, according to the last scorecard. The process frequently takes months and requires applicants to file extraordinary amounts of paperwork. About half of applicants are rejected during the trial modification period. Worst, for many HAMP participants, their monthly mortgage payment barely goes down. Those homeowners often keep paying a mortgage they can’t afford for a while before defaulting anyway, meaning the bank is the real winner.
Now, rather than doubling down and helping homeowners, the administration is shuttering, or at least shrinking, the program. As David Dayen noticed, a recent Treasury report on the Troubled Asset Relief Program tucks in the detail that the government is granting HAMP just half of the funds it originally allocated.
As for President Obama’s mortgage modification program, the CBO estimates that the Treasury Department will use no more than $20 billion of TARP funds, less than half of the $50 billion originally allocated. That’s because the CBO expects many fewer people will participate in the program than the government originally expected, a view held by many housing industry observers.
When Obama announced the program in February 2009, he said up to 4 million people could save their homes through the loan modification program, which lowers eligible borrowers’ monthly payments to no more than 31% of their pre-tax income. But more recently, officials have backtracked and said up to 4 million people could qualify for trial modifications, during which loan servicers assess their borrowers’ eligibility and ability to pay.
Through February, around 170,000 distressed homeowners have received long-term modifications under the program. Another $1.5 billion in TARP funds will be used to provide grants to state housing agencies in California, Arizona, Nevada, Florida and Michigan. These agencies are tasked with coming up with programs to assist the unemployed, the underwater who owe more than their homes are worth, and the second-lien holders.
All I can say is that I hope they funnel the additional $30 billion into other, better initiatives to help homeowners.
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14 Comments
Pingback posted September 17, 2010 @ 2:15 pm
[...] The Death of HAMP – Washington Independent [...]
Pingback posted September 17, 2010 @ 7:49 pm
[...] The Death of HAMP « The Washington Independent [...]
Comment posted September 17, 2010 @ 8:06 pm
I don't like that HAMP failed, but at least they're admitting it and scaling it back to the useful components instead of being afraid to admit a mistake like a certain prior administration.
Pingback posted September 17, 2010 @ 9:38 pm
[...] The Death of HAMP « The Washington Independent [...]
Pingback posted September 17, 2010 @ 10:56 pm
[...] The Death of HAMPThe Washington IndependentThe foreclosure crisis is far from over. Rather, as this chart from Daniel Indiviglio at The Atlantic shows, …Foreclosure Problems For Homeowners Remain As Interest Rates Increase–Are …Red, White, and Blue PressMaking Home Affordable Program And How To Qualify For ItMortgage11No way outThe Oviedo-Winter Springs VoiceStock Markets Review -Contra Costa Times -LoanSafeall 107 news articles » [...]
Pingback posted September 17, 2010 @ 11:22 pm
[...] The Death of HAMPThe Washington IndependentThe foreclosure crisis is far from over. Rather, as this chart from Daniel Indiviglio at The Atlantic shows, …Foreclosure Problems For Homeowners Remain As Interest Rates Increase–Are …Red, White, and Blue PressMaking Home Affordable Program And How To Qualify For ItMortgage11No way outThe Oviedo-Winter Springs VoiceStock Markets Review -Contra Costa Times -LoanSafeall 107 news articles » [...]
Comment posted September 18, 2010 @ 5:09 am
Lets but the blame where it should be – the banks. HAMP is a good program but the banks are screwing it up the best they can:
As a Bank of America frustrated homeowner said after told denied for not sending documents, she says, “I HAVE A COPY OF EACH OF THE 252 DOCUMENTS I HAVE SENT YOU SINCE 04/09, WHICH ONE DO YOU WANT (ANOTHER) COPY OF? “
What on earth is Obama or the Treasury suppose to do that they haven't already?
Treasury sent in the swat teams in 2009, Obama met with the Bankers at the White House who promised to do better with HAMP. Treasury required monthly reports to try and shame them into complying with HAMP. They have issued directives and more directives that the bank/servicers refuse to follow and make up lies to deny and lose paperwork sent in many times just for them to lose them again so they can blame the borrower.
Congress passes laws, not the President or Treasury. There is no HAMP law, it was forced on banks in order to get TARP funds which have now mostly been repaid.
The mortgage servicers have turned HAMP which is quite good if the rules were followed, into a huge money maker for the banks by sucking what little money homeowners have left before throwing them out of their homes.
Banks as servicers make huge profits by extending and foreclosing. Taxpayers that take the loss since about 85% of 1sts are GSE insured. Services have made an estimated $4 billion by not following the directives giving struggling homeowners the false hope of a modification, collecting the trial payments for three to eighteen months, and foreclosing with the addition of late fees, fines, back payments, and foreclosure costs passed on to the homeowner.
At the last Congressional Oversight Committee meeting one Congresswoman talked about HER OFFICE had sent in paperwork for one citizen 4 times and the bank lost it every time.
They are keeping qualified people under HAMP on endless trials and then denying without any legitimate reason.
Republicans are thrilled HAMP is failing and do a good job falsely blaming the Administration which is powerless to anything more than they have already tried.
But their PR is effective. Blame all on those that can do nothing about it and they would block anything in the Senate to help the economy. It plays great for their political game of making voters upset and blame the wrong party.
The banks are the problem not HAMP, or the Administration which has no power to force the banks to follow the HAMP directives., which they mostly ignore.
Pingback posted September 19, 2010 @ 12:18 am
[...] The Death of HAMP « The Washington Independent [...]
Pingback posted September 19, 2010 @ 5:30 pm
[...] View full post on The Washington Independent [...]
Comment posted September 21, 2010 @ 8:02 pm
Thx. Annie and David for your work–too bad this program has been a SCAM since day one. It was never intended to help anyone except the banks, as if they need further bailouts. The American homeowner continues to carry the damages, and it leaves the remnants recession to our children. The disaster is deepened because my complaint will not reach the bastards that created the program, Tim Geithner and his buddies.
Pingback posted September 25, 2010 @ 5:29 am
[...] The Death of HAMP « The Washington Independent [...]
Pingback posted October 27, 2010 @ 9:04 am
[...] week, the news was less than uplifting. The Federal program meant to help families in foreclosure is failing. The economy is not improving and in fact the poverty level in Michigan is the highest it has been [...]
Pingback posted January 18, 2011 @ 1:00 am
[...] How To Qualify For ItMortgage11Mortgage modification makers get poor gradesThe Salinas CalifornianThe Death of HAMPThe Washington IndependentContra Costa Times -OfficialWire (press release) -The [...]
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