Expanded HAMP Mortgage Mods Off to Poor Start After 6 Months

Expanded HAMP Mortgage Mods Off to Poor Start After 6 MonthsThe expansion of the government’s premiere foreclosure-prevention effort that launched June 1, 2012 was suppose to help those homeowners whose housing costs do not meet acceptable “debt-to-income” criteria.
But six months later, only 331 permanent modifications have been reported under the so-called “Tier 2” of the government’s Home Affordable Modification Program, more commonly known as HAMP.
That’s according to the most recent report on HAMP through November 2012 that was released yesterday by U.S. Treasury and Housing officials.
The overall HAMP effort launched in early 2009 and has been dogged by criticism from both consumer advocates and lawmakers for not being tough enough on lenders and allowing mortgage servicers to unjustifiably delay or deny mortgage-payment reductions or reduced loan principals.
Overall, there are 846,470 permanent modifications currently active under HAMP, involving reduced monthly mortgage payments, and in much fewer cases, permanent principal reductions. But HAMP initially targeted 3 to 4 million homeowners facing foreclosure.
In June 20120, HAMP expanded eligibility to include borrowers whose debt-to-income ratio is below 31 percent, those with properties occupied by a tenant and vacant properties that the borrower intends to rent. Eligibility was also expanded for “non-GSE loans,” those mortgages not owned or backed by government-subsidized Fannie Mae or Freddie Mac.
Many mortgage servicers were not ready to begin Tier 2 on the mandated June 1st start-up.
Here is HAMP’s actual statement on Tier 2 progress from yesterday’s update: “There is insufficient program data at this time to estimate the number of homeowners who may qualify for HAMP Tier 2.”
In comparison, homeowners who have HAMP-eligible loans may qualify for Tier 1, or the primary program launched in 2009, if they meet requirements, such as a debt-to-income ratio greater than 31 percent, occupancy, employment, and pooling and servicing agreement eligibility.
Based on current estimates, there are about 710,000 homeowners are eligible for HAMP Tier 1 out of the 3.9 million homeowners who are currently 60-plus days delinquent, HAMP administrators said in yesterday’s report.

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