Principal reduction is something that has been spoken about, but how many borrowers really get to take advantage of that?
The Obama administrations claimed that just in February, 70% of mortgages that were non-GSE loans that were eligible for a principal reductions through HAMP, Home Affordability Mortgage Program, included principal reductions as a part of the modification.
The US Treasury found that since 2009 and the conception of the Fed’s Making Homes Affordable Program, there have been over 1.5 million modifications have been filed. Although that may seem like a lot, according to HAMP only 1.1 million have been given a permanent loan modification in this span.
Of those permanent mortgage modifications, the Treasury reported an average saving on a first mortgage the homeowners was around $550 a month. The entire program has saved homeowners a total of $18.5 million in payments.
There were also over 107,000 borrowers that saved an average $155 per month with principal modifications to the 2nd mortgage. The contribution of short sales and deed in lieu of foreclosure (voluntary foreclosure) allowed many homeowners to side step large amounts of mortgage debt through the HAFA program.
All in all it seems as though these programs, however frustrating the process can be, are making efforts to keep more people in their homes.
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