Scrapping HAMP Won’t Help Recovery, Says Treasury



Efforts by Republicans to terminate President Obama’s programs for the prevention of foreclosures will harm economic recovery, said a U.S. Treasury official.

Plans to bin the HAMP (Home Affordable Modification Program) will lead to mortgage companies being less willing to assist homeowners who are struggling to meet payments, according to assistant secretary for financial stability Timothy Massad. This in turn will harm the recovery hopes of what remains a fragile property market.

 

HAMP foreclosure assistance

HAMP has helped 600,000 people avoid foreclosures according to the Treasury. Courtesy of queensforeclosures.net

A bill to terminate HAMP could be put to the vote by senators in the next two weeks. The purpose of the HAMP scheme is to help out struggling homeowners by helping them to reschedule mortgage payments, by paying banks compensation in order to get them to agree to modifications.

So far, over 600,000 homeowners have been saved from foreclosures by HAMP, Massad said.

 

Mortgage restructuring through HAMP

HAMP allows homeowners to restructure their mortgages. Courtesy of mortgageusaid.com

Homeowners have benefited not just from direct assistance, but also from the standards it has set, which has persuaded many mortgage brokers to modify payment plans without direct intervention by HAMP.

Massad claimed that HAMP has been hugely successful by any measure.

However, according to special inspector general for TARP Neil Barofsky, HAMP’s efforts had fallen “tragically short”.

He said that the program hasn’t even come near to its target of assisting 3 million homeowners to stave off the threat of foreclosure. A flawed structure together with a rush launch without proper analysis had prevented HAMP from providing the kind of assistance that was expected of it.

 

HAMP has failed to live up to its promises

Republicans believe HAMP hasn't lived up to its promises. Image courtesy askaloanmodguru.com

A vote last Wednesday in the Republican-dominated Senate has already gone against a similar scheme that is geared towards helping communities, the Neighborhood Stabilization Program. However, President Obama will veto this decision, raising hopes that he will take the same action if senators decide to scrap HAMP.

 

About Mike Wheatley

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at mike@realtybiznews.com.

Comments

  1. The HAMP program is a National Disgrace; it was designed by Geithner to assist bank earnings reports, NOT homeowners; it is presently used as the bait, in a bait and switch SCAM for predatory lending (@ taxpayer expense). How about getting someone to enforce the God Dam law as it presently stands—-

    From NEVADA AG Catherine Masto:

    The Complaint alleges that Bank of America is:
    1) Misleading consumers by promising to act upon requests for mortgage modifications within a specific period of time;
    2) Misleading consumers with false assurances that their homes would not be foreclosed while their requests for modifications were pending, but sending foreclosure notices, scheduling auction dates, and even selling consumers’ homes while they waited for decisions;
    3) Misrepresenting to consumers that they must be in default on their mortgages to be eligible for modifications when, in fact, current borrowers are eligible for assistance;
    4) Making false promises to consumers that their modifications would be made permanent if they successfully completed trial modification periods, but then failing to convert these modifications;
    5) Misleading consumers with inaccurate and deceptive reasons for denying their requests for modifications;
    6) Falsely notifying consumers or credit reporting agencies that consumers are in default when they are not;
    7) Misleading consumers with offers of modifications on one set of terms, but then providing them with agreements on different sets of terms, or misrepresenting that consumers have been approved for modifications.

    Because of Bank of America’s false promises, many Nevada consumers continued to make mortgage payments they could not afford, running through their savings, their retirement funds or their children’s education funds. Additionally, due to Bank of America’s misleading assurances, consumers deferred short-sales and passed on other attempts to mitigate their losses. And they waited anxiously, month after month, calling Bank of America and submitting their paperwork again and again, not knowing whether or when they would lose their homes. Whatever the consumers’ particular circumstances, they all suffered the stress and frustration of being misled by Bank of America while trying to take responsible action to modify their mortgages so they could continue to make their payments and remain in their homes.

    “We are holding Bank of America accountable for misleading and deceiving consumers,” said Attorney General Masto. “Nevadans who were trying desperately to save their homes were unable to get truthful information in order to make critical life decisions.”

    Bank of America’s misconduct in misrepresenting its mortgage modification program was confirmed in interviews with consumers, former employees and other third parties and through review of relevant documents. Former employees describe an environment in which Bank of America failed to staff its modification functions with employees who had the necessary training, skills and experience. According to employees, the modification process was chaotic, understaffed and not oriented to customers. Employees were even reprimanded for spending too much time with individual consumers.

    “Consumers turn to their banking or lending institutions for answers when faced with a life changing decision such as saving their home,” said Attorney General Masto. “Bank of America’s callous disregard for providing timely, correct information to people in their time of need is truly egregious.”

    How our government, led by the U.S. Treasury, can support this garbage program is beyond our belief; how the media/press can lie about the “accomplishments” of the program is an indication of the sorry state of dependency between the press and the government; and the devastation being wrought in our communities will be with us for decades.

    JA
    Madashellhomeowner