Report: HAMP Program Only Making A Dent In Foreclosure Crisis

A report released this week says the nation’s foreclosure crisis is on the verge of deepening.  This is according to the State Foreclosure Prevention Working Group, which is made up of 12 state attorneys general and 3 banking regulators.  The group collected data from 13 different mortgage servicers for two years.  This is their fourth public report.

Currently, only 4 out of 10 delinquent borrowers are involved in any assistance.  The total number of struggling homeowners continues to grow.  Delays are common for those seeking assistance.  The average time to complete a loan modification for some servicers is now more than six months.  This six months is in addition to the 90 day delinquency period which starts the foreclosure process.  By the time the homeowner has completed the modification process, over 9 months has passed.

The report says the Housing Affordable Modification Program, HAMP, is only making a dent in the foreclosure crisis.  The program allows for incentives provided to servicers who commit homeowners to mortgage reduction trials before being considered for permanent relief.   “It is clear that these efforts must be improved and servicers have not succeeded in “turning the corner” to reduce the high levels of foreclosures,” the report said. “The State Working Group is concerned that if homeowners fall out of the HAMP program in large numbers, the numbers of foreclosures closed will jump significantly”.

The Working Group made recommendations which included:

  • Servicers should suspend foreclosure proceedings on any loan currently in the loss-mitigation process
  • Loss mitigation programs must be improved by prioritizing principal reduction in areas where home prices have declined significantly.
  • Servicers must reform payment option adjustable rate mortgages.  40% of current payment option ARMs are seriously delinquent, “despite the fact that this product was given to prime borrowers”.
  • The HAMP program must increase transparency and reduce paperwork in order to reach its potential.

This crisis will continue, experts are forecasting foreclosures will hit more than 4 million homeowners in 2010 alone.

Related posts:

  1. Making Home Affordable
  2. Making Home Affordable?
  3. Lenders Resist Making Home Affordable
  4. Foreclosure Prevention Program, Fixer Upper Or Turn Key Ready?
  5. Qualifying For The New Foreclosure Relief Program

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