Since the introduction of the Home Affordable Modification Program by the Obama Administration, as well as its many additions, there have been mixed reactions from home experts, FHA lenders and consumers, but much of the feedback has been negative. While many experts believe that principal reduction, one of the aspects of HAMP, is the only viable solution to the current housing crisis, statistics do not necessarily agree. It may still be too early to determine if the loan modification program will be completely successful, but it is important to take note of the current number of defaults in the program.
March Statistics Show that Defaults Have Doubled
HUD and the US Treasury Department recently released data about HAMP's progress. In March of this year, 2,879 zoca loans payday loans direct lender no credit checks that had been previously modified under HAMP ended their participation in the program, mostly due to borrowers still not being able to afford their monthly mortgage payments. The program's goal is to help four million households make their mortgages more affordable. So far, only 21% of the 1.2 million borrowers who began the program last year have completed their zoca loans payday loan no broker no credit check modifications.
A recent report from the Congressional Oversight Panel said that due to the program's requirements and limitations, only some of those targeted households will receive modifications and of those who do receive zoca loans bad credit direct lender payday loans modifications, few will actually receive the full five-year modification. Even those borrowers who do receive the five-year modification have the chance of falling behind on their payments and facing foreclosure once again.
Not All Banks Are Willing to Fully Participate in HAMP
Despite the incentives to do so, some lenders, who are also FHA lenders, have stated that they will not reduce their borrower's principal unless they consider the borrower to be deserving according to their personal standards. Of all the lenders, JP Morgan Chase and Wells Fargo have been the most vocal about their resistance. Wells Fargo felt that principal forgiveness was not a solution that would work for everyone and JP Morgan Chase feels that principal reduction rewards those who knowingly took on more than they could bear and will punish future borrowers when and if costs are raised to accommodate for current principal reductions. Because certain lenders will not reduce their borrowers' principal balances, those borrowers are automatically precluded from receiving loan modifications under the program.
Don't Count HAMP Out Just Yet
But the U.S. Treasury pointed out that the aforementioned report did not mention what the program has accomplished so far and what it is slated to accomplish in the future. In March, there was a 35% increase in loan modifications from the previous month with 227,922 loan modifications and even more awaiting final approval. And statistics show that borrowers do benefit from HAMP. Those with loan modifications save about $512 per month on average. That is money that could be put toward their other debt (unfortunately, statistics show that many borrowers who are behind on their mortgage payments also have other, unrelated debt) or toward other necessary monthly expenses.
Borrowers should not let the negative press surrounding HAMP discourage them from applying for the program. If eligible, they could receive a loan modification that will lower their monthly payments and allow them to move one step closer toward paying off their home mortgages.
FHA Loans Can be a Helpful Alternative to Loan Modification
If a lender will not reduce a borrower's principal or a borrower does not qualify for HAMP, there are other options. Borrowers may be able to refinance their current mortgages with an FHA loan, and borrowers who already have FHA loans can take advantage of the FHA's alternatives to foreclosure. Interested homeowners can visit the U.S. Department of Housing and Urban Development's website for more information or speak with a loan specialist to learn more information about how they could benefit from refinancing with an FHA loan.