This week the Treasury Department announced that to date 521,630 homeowners had been able to take advantage of the Home Affordability Mortgage Program or HAMP. When HAMP was first announced in the Spring of 2009, the program was meant to help millions of homeowners modify their home loans to make them more affordable, but that has not been the case. While HAMP has been slow moving, during the same time period, banks have reached out and negotiated directly with their customers and helped nearly four times as many homeowners modify their loans.
With the housing market still in turmoil, banks are focusing more of their efforts on reaching modification agreements with their customers, in the hopes of keeping foreclosures down. With foreclosures being scrutinized around the country, banks are realizing that loan modifications could in the long run save them money.
At the same time, it seems that HAMP is slowing down and many critics of the program believe that the program has done very little to help the struggling homeowner. While it has helped about a half million achieve permanent loan modifications about twice as many have dropped out of the trial phase, many choosing to do a loan modification directly with their lender instead. Republicans are calling for the program to cease, while others are saying not so fast.
“I think we’ve got to remember that HAMP has achieved over a half-million modifications. These are people that make $50,000 a year, so to sort of write it off and say, ‘Well, it’s a failure,’ I think is not really appropriate,” said Tim Massad, an acting assistant Treasury secretary, in a hearing on Capitol Hill last week.
Wells Fargo is one bank that has really started to increase their loan modification program and plans to continue with their efforts. They are currently in the process of holding mediation sessions around the country in an effort to reach out to distressed homeowners who hold mortgages through them. Throughout 2011 they hope to help 150,000 of their customers. They are focusing on mortgage holders who have previously missed payments or been in failed modification programs. The bank’s goal is to help them to permanently modify their home loans.
On a final note, while loan modifications do work for the majority, according to Treasury Department data, 20.4% of loan modifications that are just a year old are currently 60 days or more delinquent.