The Obama Administration’s plan to create a piggyback mortgage-modification program for second liens is “on hold,” according to a media report, despite an announcement from officials eight months ago that such a program is vital for helping half of all borrowers facing foreclosures. With second mortgage buyers, from companies such as Amerinote Xchange looking to help those who would like to sell their second mortgage on a more beneficial buyer, those who were looking forward to this program might find themselves disappointed if the rumors are correct.
Administrators for the primary Home Affordable Modification Program (HAMP), emailed the following message in response to a request for the list of mortgage services that have signed up for the second lien program:
“That program is currently on hold and there is no list of servicers that registered before it was placed on hold,” CalculatedRiskBlog.com is reporting.
A spokesperson for the U.S. Treasury denies that the second lien program has been placed on hold. Click here for full article on Treasury’s response.
On April 28 of last year, U.S. Treasury officials announced that a modification program for second mortgages would help homeowners “by lowering payments on their second mortgages, as well as a set of measures to help underwater borrowers stay in their homes.”
The Treasury’s press release at the time said: “Second mortgages can create significant challenges in helping borrowers avoid foreclosure, even when a first lien is modified. Up to 50 percent of at-risk mortgages have second liens, and many properties in foreclosure have more than one lien.”
Administrators of HAMP and mortgage servicers have come under fire from mortgage industry experts and lawmakers who say the program is not helping enough homeowners and doesn’t address the key issue of negative equity, or underwater mortgages, where a home is valued less that the sum of outstanding mortgage balances. Experts testifying before Congress in recent weeks have said that principal reduction should be a new focus of mortgage-relief efforts.
According to a description on a website operated by HAMP administrators for servicers, the second-lien program “is expected to reach approximately 1-1.5 million responsible homeowners who are struggling to afford their mortgage payments.”
HAMP administrators have initiated in recent weeks policy changes to streamline the process for converting borrowers in trial primary-mortgage modifications to permanent status.
In its latest HAMP update for November, the government reported that 24 percent of those eligible, borrowers 60 days or longer delinquent on their mortgages, have begun trial or permanent modifications with lower monthly payments. That’s 759,058 out of 3.299 million borrowers. The report also said that only 31,382 modifications have been made permanent.
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