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Program Implemented to Prevent Foreclosure will not Reach It's Desired Goals



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By : Scott Zahid    99 or more times read
The Home Affordable Modification Program that was launched two years back to prevent foreclosures does not seem to reach its desired goals. HAMP is a modification program that was implemented to aid borrowers to modify their delinquent loan payments and brings their loans to current. There was $30 billion allotted to roll out this program by the federal government.

Lender companies that worked with its customers and awarded them a modification on their defaulted mortgages received incentives from the government. Not only this, if the borrower pays the modified payments regularly for two consecutive years, the lender firm would receive another $1000 annually from the government.

Despite all the incentives and aids provided by the federal government to prevent foreclosure properties, the program did not reach its optimum level. According to statistics, when the program was initiated in the year 2008, it was expected to help at least 3 million to 4 million distressed homeowners. However, the current figures state that it has helped about 500,000 borrowers until now and will be able to assist a maximum of 700,000 to 800,000 borrowers only. Also from the $30 billion budget, not even one fourth of the money, which amounts to $4 billion, has been utilized.

The program, when initially launched, seems to have every aspect that could help solve the foreclosure issue. Nevertheless, many lenders are not helping as many borrowers as asked to, because sometimes the lenders earn more from a foreclosure than by modifying a delinquent loan. By modifying the delinquent loans, lenders sometimes incur loss on the principal amount of the mortgage. Other problems, as borrowers having second mortgages with other lenders, also hinder the banks to offer adjustments, fearing borrowers would re-default even after modification.

Recent reports mentioned that Congressional Oversight Panel blames Treasury Department for not keeping proper track of progress of the program and not taking required steps to mould the program as per new challenges. In defense of this statement, Tim Massad, Treasury’s Acting Assistant Secretary, said the reports were “somewhat unfair” and “This program has had many critics, and there have been obviously many criticisms of it, but I think it’s important to recognize what it has accomplished.”

Considering all the facts, the Oversight Panel has asked Treasury Department to take steps to rectify the issues that are hindering the program to perform optimally and support in avoiding as many foreclosures as possible.
Original Post: http://www.mostlyforeclosures.com/blog/program-prevent-foreclosure-goals.html on MostlyForeclosures.com, your source of foreclosure houses.

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