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Big Vote Thursday: The End Of Loan Mods?
February 28th, 2011 categories: Foreclosures / Short Sales, Loans / Financing, The Economy
If you own a home in Solano County and are thinking of applying for a loan modification under the government’s widely publicized Home Affordable Modification Program (HAMP), come Thursday you may find yourself out of luck.
For that’s when the House Finance Services Committee plans to vote on a bill that, if passed, would signal the end the White House’s failed loan mod program.
When the HAMP program was announced by President Obama almost two years ago, there were high expectations and hopes that it would help millions of underwater borrowers restructure their loans so that they could stay in their homes with newly affordable monthly payments.
Well here we are two years later, and only about 3% of the $29 billion (yes, billion) that was allocated has been spent. Less than 15% of the 4 million households that HAMP was supposed to help have gotten permanent modifications. For the other HAMP applicants, HAMP has brought nothing but frustration and dissatisfaction.
If the House bill goes through, it will be the end of the road for HAMP and the unused $29 billion will go back to the Treasury, presumably to be allocated to some other program.
When the House Finance Services Committee votes on the bill, it is also likely to include three other programs that, like HAMP, have fallen flat on their faces: the Emergency Mortgage Relief Program, the Neighborhood Stabilization Program, and FHA’s mortgage refinancing program.
The FHA refinancing program has been a colossal failure. Over $8 billion was set aside to help underwater FHA borrowers refinance their loans into a payment they could afford.
But the guidelines made the program so unattractive to lenders that as recently as last December only 35 (yes, just 35) Americans took advantage of a program that was originally expected to help up to 1.5 million existing FHA borrowers. So far, just $50 million of that $8 billion has been used.
So if you’re thinking of doing a loan mod and planning on using the government’s HAMP program, sorry, but it looks like that ship is about to sink.
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