Despite the fact that the government is touting the extension of the Home Affordable Mortgage Program (HAMP), the move is likely to have little effect in terms of slowing Miami foreclosures or helping struggling homeowners.
The government program, aimed to help homeowners, had been set to expire at the end of this year, but will now run through the end of 2013.
Our Miami foreclosure attorneys understand that while the Obama administration had promised 18 months ago that more than 4 million people would be aided by the modified loans, less than 1 million have actually been helped. Media reports indicate there were almost 24,000 loan modifications made nationwide in December – bringing the grand total to about 933,000 – falling far short of the 4 million initially promised.
So why extend a program that has clearly not been effective in its goals? Because it benefits the banks.
The Department of Treasury reports that 84 percent of the people who sought help through the HAMP received it. What they don’t tell you is that often, people are sinking money into homes that – no matter what – they are not ever going to be able to afford. These are hard-working individuals who are hoping to maintain their credit and keep their homes.
The truth is, though, that many of these people are simply being squeezed for a few more mortgage payments on their underwater homes before they finally realize it’s simply not worth it and give up. The reason is because many of these modifications are temporary. The person may make smaller payments for a set period of time, without penalty. But if a person isn’t approved for a permanent loan reduction, he or she is still going to be responsible for the difference.
When they realize they still can’t afford it, they are going to be in the same position they were in to begin with.
The HAMP program was introduced by the Obama administration in 2009 to help distressed homeowners get back on their feet in a housing market that was fast dissolving into quicksand.
While the federal government had set aside more than $30 billion for the program, only about $2.3 billion has been spent to date. Another $10 billion has been committed, but hasn’t been paid yet.
Another issue that has been voiced by consumer advocates is that Fannie Mae and Freddie Mac, both government-owned mortgage lenders, are not required to forgive their borrowers’ debt. Neither the recent move to extend HAMP nor the deal struck between the U.S. government and 49 state attorneys general address this issue.
One positive aspect to the HAMP extension and modification is that the criteria for eligibility has been somewhat relaxed. Before, the only people who were allowed to participate were borrowers whose monthly mortgage payments comprised at least 31 percent of their total income. Under the new rules, even someone with more affordable payments can qualify. The government’s idea is to be able to also include those who are afflicted with other expenses, like credit card debt or hefty medical bills.
If you’re battling foreclosure in Miami or the surrounding areas, contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.