St Louis Lending Community Wonders If HAMP Will Stop Foreclosures
There seems to be more and more discouraging news stemming from the overall failure of HAMP, the federal foreclosure prevention program, not just from mortgage and real estate professionals but from key Washington officials.
With letters being traded between Neil Barofsky, special inspector general for the Troubled Assets Relief Program (TARP), and one key senator, he has recently said in a report that the U.S. Treasury now expects only 1.5 million to 2 million homeowners to get mortgage relief.
Compare this to the 4 million it initially claimed, even if this new number of permanent loan modifications could be accomplished at this point seems to be only a miracle.
The reason for this bleak outlook is that fewer than 200,000 or five percent have actually advanced from the trial program into a permanent modification mode.
But if matters couldn’t be worse, the inspector general’s report warned that many borrowers are at risk of re-defaulting on their St Louis mortgages even after receiving help under the federal program.
Again the critics are coming out of the wood works suggesting that these homeowners are irresponsible. But the truth of the matter is, many still owe more money than what their home is worth not mentioning that others have second mortgages.
One statistic that we will briefly mention in this article would be the amount of homeowners who were irresponsible and bought homes they knew they couldn’t afford, those who took adjustable rate mortgage (ARM) St Louis loans with interest only payments just to get into a bigger house they didn’t deserve and finally the ones that are guilty of getting the so-called “liars loan” or in other words those who lied on their stated income application.
Getting back to the matter at hand, Barofsky then shows his further skepticism basically saying that these loan modifications may not be the best program to continue offering. The Treasury department had other opinions as to the wide spread criticism.
In a long, drawn out response included in the report, Herbert M. Allison, assistant Treasury secretary for financial stability said the program “should be measured by how many eligible homeowners are able to avoid the pain and stigma of foreclosure by reducing their mortgage payments to affordable levels while either remaining in their homes or transitioning with dignity to more suitable housing. The number of permanent modifications is one element, but not the only element of gauging the success.”
It is rather interesting how politicians and their ever-so-loyal henchmen try to inadvertently, yet aggressively make excuses at why everyone is looking at things the wrong way except for them.
Allison seems to want everyone to understand that the important point is not the failing of HAMP, but that Barofsky is simply not measuring its lack of success in the correct manner.
Since Allison clearly points out that permanent modifications are really only one way to help struggling homeowners, this somehow suggests that he himself doesn’t firmly believe his previous comment.
We cannot ignore the fact that these servicers are also offering other foreclosure prevention initiatives such as short sales as realistic alternatives.
However, most consumers have heard from its beginnings that this federal loan modification program (HAMP) was to be the very best way to help this country on the road to recovery by stopping the onslaught of foreclosures.
And as we are finding out, many of these modifications did not include a realistic principal reduction, which means in all likelihood, it will fail.
Look at some of the best St Louis home loan options on a St Louis mortgage or a St Louis refinancing loan, by visiting our websites or by calling Steve, Doug or Floyd at 877-334-0210 or 314-334-0210.