Time Might be Running Out for Loan Modifications

On Tuesday, March 29, 2011, the House voted on H.R. 839, the HAMP Termination Act of 2011. The House passed the HAMP Termination Act of 2011 on Tuesday by a vote of 252-170.  The legislation amends the Emergency Economic Stabilization Act of 2008 (TARP) to terminate the authority of the Secretary of the Treasury to provide new mortgage modification assistance under the Home Affordable Modification Program (HAMP), with the exception of existing obligations to homeowners who already have an offer to participate in the program.

When announcing the program, the Obama administration promised that HAMP would help upwards of three million at-risk to avoid foreclosure by reducing monthly payments to sustainable levels. In the two years since the start of the HAMP program, the amount of foreclosures filed has been huge: 2.8 million in 2009 and 2.9 million in 2010. Foreclosure filings for 2011 are projected to increase 20% from 2010, and will most likely exceed three million homeowners.  Even Obama’s Treasury Secretary Timothy Geithner has the realization that HAMP won’t come close to helping the promised three million homeowners.

The Home Affordable Modification Program (HAMP), part of President Obama’s “Making Home Affordable” (MHA) initiative, started off with the Treasury Department receiving $30 billion of TARP funding to pay servicer, borrower, and investor incentives under HAMP.   As of December 2010, approximately 520,000 permanent modifications were in place under HAMP at a cost of just under $1.0 billion.  The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) quarterly reports, in addition to reports from the Government Accountability Office, have been particularly critical of the Program.

The Home Affordable Modification Program (HAMP), is a great program for the homeowners who are able to make it work for them. The HAMP program is designed for homeowners to file their own loan modification and a three page application makes it easy to do so.

When the bill reaches the Democrat-held Senate, it will most likely fail. If the HAMP Termination Act of 2011 passes in the Senate, Obama has said he will veto the bill.  It is, however, only a matter of time before the housing market improves and the HAMP modification program is no longer available.  So in the meantime, if you are a homeowner, I would encourage you to apply for a loan modification before it is too late.

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