• DYE CULIK PC | Consumer Protection Division

HAMP Loan Mod Program a Success for Bankers, Failure for Homeowners, Says Article

Remember HAMP, the Home Affordable Modification Program enacted at the start of the mortgage crisis? A report from The American Prospect summarizes the effect of HAMP over the course its implementation in an article called Needless Default, and concludes that it is a “disgrace” that will haunt the politicians — politicians who were too afraid of big banks to give HAMP the teeth it needed for homeowners to be able to get the help they needed.

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Although the Department of the Treasury ran its own loan modification program in 2008, which streamlined the process and provided quick modifications to at-risk homeowners, HAMP did the opposite.

The administration of the program by mortgage services was so byzantine, that it only helped about 1 million out of the 10 million people who needed help the most. Many borrowers complained about an endless back-and-forth process of submitting documents every month, only to have the bank lose them or re-request them for no reason

And, even after more than five years of HAMP, about 30% of modifications have fallen into default.

What was the advantage to the banks? The article describes homeowners as being “steamrolled by a jumbo jet, because the foreclosures were spread out over a longer period of time, even though the banks were allowed to collect more money because of how long foreclosures took.

Is the foreclosure crisis over? No. Foreclosures are still at three times the usual level. The Consumer Financial Protection Bureau has found that numerous mortgage servicers and banks routinely violate consumer-protection regulations enacted since the foreclosure crisis. Not surprisingly, two-thirds of voters think the economy is rigged for the wealthy.

American Prospect, Needless Default

#foreclosure #HAMP #loanmodification #mortgage