A recent report out of Washington sheds a dim light on the Obama Administration’s Home Affordable Modification Program. The amount of homeowners that requested assistance through the program fell to its lowest level this year. The severe reduction in the public’s participation has begun to raise questions as to the program’s effectiveness. Reports from the government’s program supervisors stated that 28,000 homeowners have settled their requests to enter the program. This is a large reduction in applications compared to the 68,000 that applied in April of this year.
Economists across the financial board have not been slow in criticizing the HAMP program since its inception. The goal of the program was to throw a rescue line to an estimated 4 million homeowners that were faced with losing their homes through foreclosure. To-date there has only been 467,000 homeowners who have found permanent modification, far less than the initial prediction.
There is no clear explanation why the numbers have fallen so much. According to market insiders there is no shortage of struggling homeowners that require assistance. Some within the market believe that the government has lost some of its potential modifications to private banks. There has been some pressure applied by the Obama Administration for private banks to take a more lenient approach to loans that are in a default state. Another factor that may be playing a part in the decrease in modifications is the amount of time that has passed since the market crashed. There is a large portion of homeowners that just ran out of time or left their homes out of frustration.
The question now for the Administration is what to do? There are some within the Presidents Administration that are calling for a moratorium on foreclosures. There is others within Congress that say that a moratorium would only cause additional fear in the housing sector and overall cause more harm than good. The reality is during midterm election most politician’s attentions are geared towards the electoral seat up for grabs and not what is actually burdening their constituents right now. Everything right now is talking point and there will not likely be any real action until after the elections.
See also:
PulteGroup CEO Calls For Moratorium
White House Rejected Calls for Broad Moratorium
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I don’t know why the government hasn’t come up with something better than this. HAMP clearly is not effective with so little people actually taking advantage of it.
This is pretty sad for America, that a program implemented to help homeowners is not working as planned. I think a lot of it is based in fear and just plain ignorance. As a person who helps defaulted and distressed homeowners, I notice that way too many people don’t think that they can or will qualify and some people just don’t know the steps to take in order to use these programs. It just seems to hard for them…and at this point, usually the fight is already taken out of them. It is sad, but true. But I do say I am very happy for the 10% or so who actually did take advantage of this aid.