With so much talk about the Federal Open Market Committee's press release yesterday, Apple's new iPad, the lackluster state of the union address last night and a variety of other business related news, I wouldn't blame you for missing the anti-climatic revisions to President's Obama foreclosure prevention plan.
Today's press release by the Treasury Department was to have been the next step forward to improve the effectiveness of the Making Home Affordable Program (HAMP). If you recall, HAMP was launched last April to slow down the rapid rise in foreclosures through loan modifications. Here are some interesting results of HAMP as of year end 2009.
- Only 66,500 Permanent Loan Modifications; 900,000+ Application Requests
- 100+ Servicers Participating in HAMP; Accounts for 89% of ALL Mortgage Debt
- $500 per Month - Median Monthly Savings
In the haste of rolling out HAMP last summer, the Treasury Department allowed applicants to get approved for a temporary loan modification based on an oral application. It was then left to the servicers to chase down the paperwork over the 3 month trial period. If everything was accurate and the homeowner made the new payments on time, then the temporary loan modifications would become permanent.
Right now the HAMP only has a 7.4% success rate from application to permanent loan modification. Consequently, the Obama administration and the Treasury Department want to improve their success rate.
Can you guess what the big announcement was today?
In order to improve their success rate, they want to be able to get more homeowners converted from their trial loan modifications to permanent loan modifications. How will they accomplish this task?
From now on, homeowners will be required to submit all paperwork in advance of being offered a temporary loan modification. This way all that is left is for the homeowner to make their payments for 3 months. There are other things that were revised and updated, so go ahead and read the complete Supplemental Directive 10-01, Home Affordable Modification Program - Program Update and Resolution of Active Trial Modifications.
The Irony - HAMP Offered Stated Income Loan Modifications
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