Last week, we discussed the Home Affordable Modification Program (HAMP). Currently, only 2000 of the 650,000 homeowners who qualify have been offered permanent mortgage modifications.
On Monday, the Treasury Department issued an ultimatum to lenders: no cash incentives until they make the mortgage modifications issued under HAMP permanent.
So how does HAMP stack up? Not well. Its track record includes:
- Exorbitant fees collected by the lenders who “modify” the loans.
- Focus on last year’s problem of sub-prime mortgages instead of the root cause of mortgage delinquency such as job loss.
- Too much red tape.
- The fact that most mortgages are still owned by securitized trusts. Lenders often lack the authority to permanently reduce mortgage payments even if they want to.
Whatever the reason, at least the Administration has opened its eyes to HAMP’s shortcomings; looks like the program’s going to need a modification of its own.