The Obama administration’s foreclosure prevention programs have been granted an extension, even as foreclosure around the country are tapering off.
“The housing market is gaining steam, but many homeowners are still struggling,” said Treasury Secretary Jacob Lew in a statement announcing the government’s decision to extend the Home Affordable Mortgage Program (HAMP) to all eligible homeowners.
Lateer the same day Fannie Mae and Freddie Mac’s regulator announced that both of those entities would also extend HAMP and the streamlined HAMP plan through the end of 2015. HAMP was originally set to expire at the end of 2013 and the streamline program was to end in August 2015.
“One of [the Federal Housing Finance Agency’s (FHFA)] priorities is to provide assistance to struggling borrowers who are at risk of losing their homes,” said FHFA Acting Director Edward J. DeMarco in a statement. “These extensions keep two valuable foreclosure prevention programs available to those who need them. The extensions also align the end date for three key assistance programs that were developed in response to the housing crisis.”
The government has reported that HAMP and the streamlined version have helped about 1.1 million homeowners avoid foreclosure with permanent mortgage modifications. Through the program, homeowners who are behind on their payments can receive payment reductions.
HAMP has received some criticism for it re-default rates. A report from the special investigator general of HAMP found that 46.1 percent of homeowners with mortgage modifications made in 2009 were again defaulting and those permanent modifications made in 2010 have a redault range of 28.9 percent to 37.6 percent.
“The number of homeowners who have redefaulted on a HAMP permanent mortgage modification is increasing at an alarming rate,” the report said. “Treasury’s data shows that the longer a homeowner remains in HAMP, the more likely he or she is to redefault out of the program.”
The decision to extend the programs also comes at a time when the foreclosure rate seems to be whittling down anyway. Foreclosure data company RealtyTrac reported recently that foreclosure filings in April fell 5 percent from March and 23 percent from the previous year. Total foreclosure activity fell to the lowest level in over six years.