Home Affordable Mortgage Program

Well, here is the ugly truth - the HAMP (Home Affordable Mortgage Program) is not working.

And why you ask?  It is because the lenders are not required by law to make a loan modification.  It appears the lenders would rather foreclose on the property because any loss they take on the property is paid through the guarantees of Freddie Mac, Fannie Mae or  the FHA.  So what’s the incentive to modify a loan?  None.  Plus they have this little loophole in the HAMP program that allows the lender a way out of making a modification.  It states, “A loan modification is not in the best interest of the investor.”  But you’ll never be told specifically why.

So what words of encouragement do I have for my prospective clients?  Sadly, not many.  I advise trying for a loan modification.  You must follow the lenders instructions to a T, crossing every “t” and dotting every “i”.  Follow up every fax of documents (which the lenders say you must do) by sending a hard copy by certified mail.  Make lots of phone calls for the status of your application.

If, after you have followed all the instructions and are still getting the run around, which, sadly to say happens on just about every file, then I recommend filing a complaint with the OCC.

“The Making Home Affordable Program does not provide an individualized remedy that can be enforced affirmatively by homeowners whose lenders do not offer a palatable modification option…virtually all of the federal program proposals have operated by providing incentives to institutions rather than by mandating legal compliance with a standard of obligatory modification.”  This quote was taken from an article Residential Mortgage Relief for Homeowners and Tenants: State and Federal Legislative Responses to the Foreclosure Crisis by Kark E. Geier, Esq.

I wish the news was better, but I see nothing coming from the government that will make the lenders step up and do the right thing – help those homeowners who’s tax money bailed out a lot of them in their time of need.