St Louis Lending Community Wonders If HAMP Will Stop Foreclosures
There seems to be more and more discouraging news stemming from the overall failure of HAMP, the federal foreclosure prevention program, not just from mortgage and real estate professionals but from key Washington officials.
There were letters recently exchanged between one key senator and Neil Barofsky, special inspector general for the Troubled Assets Relief Program (TARP), on the subject of HAMP with Barofsky saying that only 1.5 million or so homeowners would get any type of mortgage assistance.
Many feel that this would be nothing short of a miracle to help these millions of consumers needing assistance. But what of the other 2 million homeowners who have applied for the foreclosure prevention program?
The actual statistics may be surprising but only 200,000 homeowners have been able to go from their trial modification to a permanent loan status.
But if matters couldn’t be worse, the inspector general’s report warned that many borrowers are at risk of re-defaulting on their St Louis mortgages even after receiving help under the federal program.
Is this due to irresponsibility on the homeowner’s part? Consider this: Many of these consumers still owe significantly more money than their homes are worth. In addition, some have second mortgages or other debts that HAMP didn’t provide for.
Without digressing to a great degree, I think its fair to mention the abominable acts of not just the big insurance and banking leviathans but the average person who bought a home they knew they just couldn’t afford and did it by taking the only type of loan that could give them this undeserved asset. Then you have the pure fraudulent acts of those who knowingly lied on their stated income application. Years later, these acts have come to be known as “liar loans.”
Barofsky then goes on to express his ongoing skepticism that the continuous offering of modifications was less than a meaningful goal. What did the Treasury have to say in regards to what Barofsky said?
In a long, drawn out response included in the report, Herbert M. Allison, assistant Treasury secretary for financial stability said the program “should be measured by how many eligible homeowners are able to avoid the pain and stigma of foreclosure by reducing their mortgage payments to affordable levels while either remaining in their homes or transitioning with dignity to more suitable housing. The number of permanent modifications is one element, but not the only element of gauging the success.”
Whether this federal program meets its ultimate success or failure is second only to the fact that these key officials want us to view their ideologies from their viewpoint and no other.
Allison seems to want everyone to understand that the important point is not the failing of HAMP, but that Barofsky is simply not measuring its lack of success in the correct manner.
Since Allison clearly points out that permanent modifications are really only one way to help struggling homeowners, this somehow suggests that he himself doesn’t firmly believe his previous comment.
The fact that servicers offering other foreclosure prevention initiatives and alternatives such as short sales must be taken into consideration.
Yet, most people who have been following this program from its inception were spoon fed the amazing idea that permanent loan modifications through HAMP was the best and perhaps the only way the country would see this insurmountable amount of foreclosures go away.
And as we are finding out, many of these modifications did not include a realistic principal reduction, which means in all likelihood, it will fail.
If you are wanting to discuss some of the best home loan options on a St Louis mortgage or a St Louis refinancing loan, visit our websites or call Floyd, Steve or Doug at 877-334-0210 or 314-334-0210.