What's affordable about this program? Is it really a modification program or just another program that's delaying the inevitable.
More than 85 percent of mortgage loans are now covered by the Obama administration's Home Affordable Modification Program. A total of 47 loan servicers were participating in the HAMP program at the end of August, up from 38 in July, and the program is on track to meet a goal of 500,000 loan modifications by November, the Treasury Department said in releasing its latest report on the performance of participating loan servicers.
The reality of HAMP... What this program does is modify people's payments for 6 months, typically reducing them by 30-40%. Then in 7th month the homeowner has a large balloon payment due.
I met with a homeowner today and she has been making a modified payment in the amount of $581 on the HAMP program. Now in month 7 she has a balloon payment of over $11,000 due. So where is someone who was headed into foreclosure and now on a modification program supposed to come up with over $11,000?
So are the number of foreclosures really going down or being delayed? What happens in 8-9 months owith all these modifications when the balloon payments come due? We are going to have a big surge of foreclosures once again. How is this helping anyone or the housing market to recover? The banks are trying to get as much out of down and out homeowners as possible.
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