With news of health care rulings and the debate over extension of tax cuts, it may be unsurprising that there’s been less reporting in the media about a recent report from the Congressional Oversight Panel on HAMP (Home Affordable Modification Program), the Obama administration’s program designed to help Americans avoid foreclosure.
But, as CreditSlips.org reports, recent foreclosure modification numbers are out – and they aren’t too rosy. Here’s a summary.
- Twenty-one percent of HAMP modifications re-default in their first year: This number is shocking for a few reasons. First, because it means that people who qualify for and get their banks to agree to a mortgage modification are, in many cases, still unable to stay current on their loans. Second, because earlier reports on HAMP suggested that few qualified homeowners were able to convince their banks to modify their mortgages in the first place – 21 percent re-default means that even the “lucky” ones aren’t benefiting from the modification.
- HAMP modifications could begin to decline in number: Another troubling figure that CreditSlips.org reports is that the current rate of re-defaults suggests that, in the coming months, the number of houses currently in successful modification programs will actually begin to decrease as more and more people default. Clearly, this does not suggest that HAMP had a resoundingly positive effect on people facing foreclosure.
How HAMP Works (or Doesn’t) & How to Deal with Foreclosure Threats
Theoretically, HAMP was supposed to work like this:
- Homeowners who were current but underwater on their mortgages (that is, who owed more than their home’s current value) could apply to have their bank modify the terms of their mortgage agreement (either by lowering the interest rate, changing monthly payments, changing the term of loan, or some combination of these).
- Once they were accepted into the program and their banks agreed to a modified mortgage payment plan, homeowners had a three-month trial period in which to begin making their modified payments.
- To incentivize bank participation, the government offered cash rewards for each modification and for each modified mortgage that was current at various intervals after the permanent modification was put into place.
Unfortunately, though, it seems like HAMP (much like the Bush administration’s HOPE NOW) has proved to be largely unsuccessful. So what can you do if your mortgage payments are becoming more than you can handle?
It may be time to consider Chapter 13 bankruptcy, which will halt collection actions of all kinds, including foreclosure proceedings. Because Chapter 13 cases last for between three and five years, many filers have a chance to either catch up on their mortgage payments or make alternate living arrangements by the time the receive their discharge from the court.
Similar Posts:
- How long can I stay in my house when I file for bankruptcy and stop paying my mortgage?
- Mortgage Cram-Downs Becoming More Common?
- New Forelosure Law in New York Requires Attorneys to Verify Foreclosure Papers
- Foreclosure followed by a deficiency lawsuit in North Carolina?
- Can Chapter 13 Debtor Add A Second Mortgage Strip To An Already Confirmed Chapter 13 Plan?
Tags: News, News Foreclosure
Posted December 16, 2010 by Amelie Hampton under Bankruptcy Articles