More Foreclosures Imminent

Assistant Secretary to Financial Stability,  Herbert Allison,  reported to the Senate Panel that the Government is considering a proposal to allow homeowners to remain in their homes as renters after foreclosure proceedings have ended… an attempt by the current administration to address the abundance of vacant homes across the country.

Freddie Mac launched a similar program in March that allows homeowners to remain in their homes as renters after foreclosure proceedings.  Most former owners instead chose to accept money to voluntarily vacate under the cash-for-keys program.

During his written testimony to the Senate Banking Committee, Allison detailed the “Treasury Departments comprehensive initiatives to stabilize the U.S. housing market and support homeowners”.   Which centers on the Home Affordable Refinance Program (HARP) and  the Home Affordable Modification Program (HAMP)… also supporting Fannie Mae and Freddie Mac.

HAMP works to reduce mortgage payments based on the borrowers gross monthly income.  Under the current guidelines, over 97% of mortgages in this country have a principle balance that may make them eligible for modification under HAMP.

During his briefing, Allison detailed the Treasury’s initial success with the plan, more than 80% of all mortgage loans in the country are now covered by the program.  Allison also reported that even with everything that is available to the borrower, many cannot be saved from losing their home.

HAMP won’t save investors and “borrowers who bought homes well beyond what they could afford and so would be unable to make the monthly payment even on a modified loan”.  Allison admits, “even if HAMP is a total success, we should still expect millions of foreclosures”.

Related posts:

1. More Changes for Lenders as Additional Foreclosures Loom
2. Permanent Loan Modifications Difficult To Achieve
3. Lenders Resist Making Home Affordable
4. Report: HAMP Program Only Making A Dent In Foreclosure Crisis
5. Coalition Proposes Mortgage Principal Reduction Plan

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