Federal mortgage modification plan disappointing so far
| Atlanta
The Obama administration announced Friday that its much-lauded mortgage modification plan has had a disappointing start, helping far fewer Americans stay in their homes than originally hoped.
Intended to bolster struggling homeowners, the Home Affordable Modification Program (HAMP) has permanently helped only 66,000 homeowners out of 4 million that may be eligible.
As foreclosures are expected to rise from 2.8 million in 2009 to 3 million in 2010, analysts expect the Obama administration to modify the modification program to keep it from becoming another major political issue in a year when Democrats are facing a growing anti-spending sentiment among the voting public.
鈥淗AMP is running into issues of too few permanent modifications, and re-default performance is expected to be poor," Barclays Capital said in a recent research note to clients.
Treasury Department officials said Friday that more than 900,000 homeowners have signed up for trial modifications and the program has yielded 鈥渕easurable success.鈥� The conversion rate from trial to permanent modification, however, is only about 15 percent.
So what's hampering HAMP?
One problem reported by the Treasury Department is that only 75 percent of homeowners are able to stay current on their new payments for a three month trial period. What鈥檚 more, the Obama administration and mortgage servicers say homeowners aren鈥檛 fully completing the needed documentation proving income and hardship.
But homeowners are blaming servicers, who get paid for successfully lowering monthly payments. One dissatisfied applicant used the Huffington Post to 鈥� and shed some light on why the program may need to be fixed.
Calling the program a 鈥渃ruel joke,鈥� HAMP applicant Craig Vale said 鈥測ou are falsely led to believe that some help may actually come your way, but in truth the banks want little to do with you or the HAMP program.鈥�
Mr. Vale claims he鈥檚 saving less than $2 a day on his reworked mortgage, calling the entire thing a 鈥渇ailure.鈥� The irony,鈥� he adds, 鈥渋s that my bank will tell uncle Sam they 鈥榮uccessfully鈥� modified my mortgage.鈥�
More than $1.5 billion saved
Treasury officials said that 854,000 homeowners taking part in both trial and permanent modification requests have saved more than $1.5 billion on their mortgage payments, receiving an average reduction of $516 a month.
US banks, insurance companies and carmakers, meanwhile, have received over $373 billion in taxpayer bailouts, .
In his weekly Saturday address, to keep up the pressure on US banks to do right by the American taxpayer, who, after all, bailed out much of the financial industry over the last 18 months.
Saying that, 鈥淲e鈥檙e not going to let Wall Street take the money and run,鈥� Obama vowed to make sure that banks can never put the US economy at risk again.
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