Obama Mulls Foreclosure Ban, Forcing HAMP Review

Mortgage reliefUnder growing pressure to improve its much-criticized mortgage relief efforts, the Obama Administration is considering a ban on all foreclosures – unless lenders have screened borrowers for inclusion in the government’s Home Affordable Modification Program, according to media reports.
Bloomberg first reported the proposal based on a U.S. Treasury document. The plan “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed.”
A Treasury spokeswoman Meg Reilly confirmed the existence of the document, saying in an email that “it is one of the many ideas under consideration in the administration’s ongoing housing stabilization efforts,” according to Bloomberg.
The proposed changes would prohibit lenders from initiating new foreclosure actions before a HAMP consideration. And it would require lenders to stop any ongoing proceedings for borrowers that enter a trial modification.
Under HAMP’s current rules, lenders can foreclose on borrowers even if they are in a mortgage reduction trial period that usually precedes the approval process for permanent relief.
The report was released as a top HAMP overseer came under fire before a Congressional panel. Phyllis Caldwell, chief of the U.S. Treasury’s Homeownership Preservation Office, said HAMP is working toward the goal of permanently assisting 4 million homeowners by 2012. But members of the House Oversight and Government Reform subcommittee on domestic policy were not convinced.
“You’re going to have to do more,” said Rep. Dennis Kucinich, D-Ohio, who chairs the panel.
HAMP has operated under heavy criticism from lawmakers, homeowner advocates and mortgage industry experts for moving to slowly, being too bureaucratic and not addressing the epidemic of “underwater” homeowners, many of whom are “walking away” from their homes because they owe much more than their properties are valued.
Only 116,000 homeowners have been approved for permanent modifications under HAMP through January. The one-year-old, $75 billion has assisted only 28 percent of eligible borrowers, those late 60 days or more on their mortgages.
“HAMP continues to improve and we still have much work to do in reaching borrowers and improving program efficiency,” Caldwell said in a prepared statement. “With each modification, the typical borrower saves over $500 per month, translating to more than $2.2 billion so far in aggregate savings from trial and permanent modifications.”

2 thoughts on “Obama Mulls Foreclosure Ban, Forcing HAMP Review

  • February 26, 2010 at 11:25 am

    This is BS, all bailouts are BS, for the banks, for homeowners. No one forced you to buy the home! Another colossal waist of money and resources! Let the system purge on it’s own, this is only delaying the inevetable.

  • February 26, 2010 at 3:07 pm

    It is a cancer, cut it out! Let the banks go, let the mortgage companies go and let the homeowners go. The only way we get out of this is to let them foreclose. Home prices are artificially inflated right now because the supply has been curtailed by all this government interference. Keep this up and we will be like Japan and go through 20 years of stagflation.

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