The federal governments Home Affordable Modification Program of HAMP, is failing to meet the goal of permanently modifying mortgage for 3 to 4 million troubled homeowners. Because of this, it has come under more scrutiny by lawmakers.
At the end of January, House republicans introduced a bill that would end the effort made by HAMP. House republicans and other HAMP critics say that the government's mortgage modification program has not made a significant enough impact to warrant the costs and continuation of HAMP. Still, the Obama administration continues to back the program.
A Treasury report released January 31st indicated that HAMP is falling far short of helping the 3 to 4 million distressed homeowners that is set out to do. Through December 2010, 521,630 homeowners have received permanent loan modifications through the government's HAMP effort. According to the Treasury report, there are currently 2,896,806 loans that are potentially eligible for a modification. Yet, as of spring 2009, only 18% of the numbers have been helped.
Conversely, banks have stepped up efforts recently to help modify mortgages in-house, rather than go through the HAMP program. Banks are doing more and more modification themselves because they say that the requirements for a HAMP modification make it too difficult for many troubled borrowers to permanently qualify. Once a borrower is labeled as ineligible for a HAMP modification, banks will often workout a modification with the borrowers. Because of bank efforts they have modified around 4 times more mortgages than HAMP has since spring 2009.
Mortgage modifications done by banks continue to climb in recent months while HAMP modifications fall. Since 2007 mortgage services have completed mortgage modifications on nearly 3.5 million distressed mortgages. The recent increased effort put forth by the individual banks towards modifying distressed mortgages is only helping the HAMP critics.
Still, the Home Affordable Modification Program has helped over half a million borrowers with troubled mortgages. Many of these borrowers could not have received a mortgage modification without the program. In that sense, HAMP has not been a complete failure.
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