Central Florida Short Sales: Almost 30% of HAMP are back in default, But, It’s getting worse

The Home Affordable Modification Program (HAMP) has not helped as many borrowers as it may seem, Oh really you may say, according to the Office of the Special Inspector General for the Troubled Asset Relief Program.

HAMP, a government loan modification program created to prevent foreclosures, has provided about 1.2 million modifications to distressed borrowers since its inception in 2009. Of those borrowers, 306,538 fell behind on their payments by three months, which means in actuality, 865,100 are still actively in the program, the taxpayer watchdog agency revealed. Borrowers who miss three consecutive payments become disqualified from the program.

The percentage of modified homeowners who end up as re-defaulters has steadily increased over time. At the end of 2009, the share stood at 1 percent and has since risen to 26 percent as of April 2013 with 22 percent of those have entered into the foreclosure process.

Among the oldest HAMP modifications, the re-default rate was 46 percent. For loans modified in 2010, the re-default rate averaged 38 percent.

According to the report, modified homeowners most likely to fall behind on payments received the smallest monthly payment reductions; are underwater on their mortgage; had subprime credit scores when modified; and have high debt burdens.

HAMP re-defaults not only impact homeowners and affected communities, but they also cost taxpayers. Taxpayers have lost a total of $815 million in TARP funds that were used to pay incentives for 163,811 modifications that re-defaulted.

“Homeowners who receive a HAMP permanent modification but end up losing their home to foreclosure or fall out of the TARP program are not being helped to keep their homes as TARP intended, and taxpayers lose the positive impact these funds were to provide for the individual family and the community at large,” the report explained.

From the Making Home Affordable website. HAMP is;

Home Affordable Modification Program

If you are not unemployed, but you’re still struggling to make your mortgage payments, you may be eligible for the Home Affordable Modification Program (HAMP®). HAMP may lower your monthly mortgage payments in order to make them more affordable and sustainable for the long-term.

If you currently occupy your home as your primary residence, we encourage you to contact your mortgage servicer as soon as possible to begin the HAMP evaluation process.

In an effort to continue to provide meaningful solutions to the housing crisis, effective June 1, 2012, the Obama Administration expanded the population of homeowners that may be eligible for the Home Affordable Modification Program to include:

Homeowners who are applying for a modification on a home that is not their primary residence, but the property is currently rented or the homeowner intends to rent it.
Homeowners who previously did not qualify for HAMP because their debt-to-income ratio was 31% or lower.
Homeowners who previously received a HAMP trial period plan, but defaulted in their trial payments.
Homeowners who previously received a HAMP permanent modification, but defaulted in their payments, therefore losing good standing.

If you are a homeowner who falls into any of these criteria, you may be eligible for a modification under the expanded criteria. Please check with your Home Affordable Modification Program

If you currently occupy your home as your primary residence, we encourage you to contact your mortgage servicer as soon as possible to begin the HAMP evaluation process.

Homeowners who are applying for a modification on a home that is not their primary residence, but the property is currently rented or the homeowner intends to rent it.
Homeowners who previously did not qualify for HAMP because their debt-to-income ratio was 31% or lower.
Homeowners who previously received a HAMP trial period plan, but defaulted in their trial payments.
Homeowners who previously received a HAMP permanent modification, but defaulted in their payments, therefore losing good standing.

If you are a homeowner who falls into any of these criteria, you may be eligible for a modification under the expanded criteria. Please check with your mortgage company to see if you are eligible to begin the HAMP evaluation process.

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