If you were unsuccessful at modifying your home loan, perhaps this will sound familiar: while you were making your trial payments, your servicer simultaneously began the foreclosure process.
A chance to remodify your loan mod
Below is an excerpt from HSH.com’s original article “Why both mortgage servicers and borrowers hate HAMP“:
Homeowners and government watchdogs agree: The much-vaunted Home Affordable Modification Program (HAMP) has so far been a failure. Likewise, the mortgage servicing companies charged with implementing the program aren’t too happy with it either. But do servicers’ complaints have merit? Or are they improperly and deliberately denying HAMP claims?
The mere suggestion of this concept is bound to envelope two schools of thought, two sets of strictly-opposing opinions. While some readers may interpret principal reductions as a glimmer of hope that’s long overdue — a solution that may keep some from failing on their mortgage — others are bound to gnash their teeth in disfavor, another home-retention strategy that only serves to soften the consequences of falling behind on your mortgage.
Principal Reduction — when a lender or a servicer reduces the total amount that you owe on your home loan — has long been viewed as a modification strategy of last resort. However, due to the ongoing failure of the home affordable modification program (HAMP) — with its minimal permanent mods, high re-default rates, etc. — and the ongoing issues of falling home prices and rising foreclosures, the chatter that’s calling for principal reductions (especially in the hardest-hit housing markets) has become louder. That being said, there’s another group who wants to avoid the use of principal reductions like the plague, since they are viewed as a reward for failure.
One lawmaker has proposed a bill that would prevent illegal immigrants from both issuing home loans as well as getting loan modifications. Representative Kenny Marchant’s (R-Texas) Mortgage E-Verify Act involves a web-based tool that could, according to Marchant, save millions of dollars each year that would otherwise be lost to mortgage fraud:
The E-Verify program is a voluntary, Web-based system run by the federal government to help businesses certify that potential employees are legally authorized to work in the United States.
Update3: If you’ve been ushered into a long-term trial mod, one non-profit wants to hear your story. Click here to find out more.
Original Post (published 12/10/09): We’ve covered the Treasury’s Making Home Affordable Program (MHA) quite a lot since it’s inception and have been quick to point out the program’s flaws as well as the flaws others have noticed. The White House has focused less on addressing the structural flaws of this program — which we feel have created a host of “unintended consequences” — and more on prodding lenders and servicers to step up their game.
Last week was a busy one for us here at HSH.com. We apologize that our weekly recap didn’t have a chance to go live over the weekend. You know what they say, “better late than never.”
Monday:
“Mortgage Rates Fell As Low As 4.83% Last Week“: This is the lowest 30-year Conforming rate we’ve seen in decades!
In the middle of October, we wrote two blog posts that seriously called into question the effectiveness of the Home Affordable Modification Program (HAMP). In addition to magnifying the program’s inabilities, our two articles also highlighted a wealth of HAMP’s “unintended consequences.” While the two articles addressed different specifics, the general theme behind them both was the same: HAMP is flawed.
Are Loan Mods Destroying the Mortgage Industry?
Update1 Is it Time to Modify Modifications?
Be sure to check out our “Weekly Recap” to read up on any stories you might have missed this week:
Friday:
“Update1: Congress Approves Jumbo Conforming Limit, Still Unnecessary”
UPDATE1: We thought so, and said just as much last Friday…we just had no idea it would happen this quickly. A short bulletin from National Mortgage News (NMN) this morning reported that the Treasury Department’s Office of Homeownership Preservation (OHP) announced at the Mortgage Banker’s Association’s annual conference that a new wrinkle to the Federal loan modification program is coming soon. Laurie Maggiano of the OHP said the new loan mod effort will be designed to assist borrowers who don’t fit into the current modification mold.
Looking through the latest numbers, we speculated on Friday that it may be time to alter the current structure of loan modifications; according to statistical reports, loan mod issuance has slowed (see original story below), redefault rates are high, and ‘foreclosures in process’ continue to grow.
Touted as a “milestone” by the Treasury, President Obama’s loan modification program has reportedly helped 500,000 borrowers avoid foreclosure. According to the New York Times, the White House set out to reach the 500,000 mark by the end of this month, and is quite encouraged that the goal was met a few weeks ahead of schedule.
While the number is certainly encouraging, we have to wonder how many of these modified loans will wind up growing delinquent or failing. Our friend Alan Zibel at the Associated Press wrote last month that: Read the rest of this entry »
HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.
