It’s the END OF HAMP… And the Beginning of a New Era in Loan Modifications
HAMP or the Home Affordable Modification Program, has to be one of the least popular government programs ever implemented. The irony is that it also became the best answer we’ve seen in terms of modifying loans to prevent foreclosures.
I’ve been writing about the foreclosure crisis since 2008. When HAMP was first announced by President Obama in early 2009, I was very critical of it. When HAMP officially launched in June of that year, it was a nightmare and I wrote dozens of articles about just how bad it was. However, by 2013, it got better and last year it was at its best. So, now…
HAMP is ending this year, as of December 31st, it will be history.
What won’t be history, unfortunately, are the foreclosures that we’ve been trying to prevent since 2008. Sure, the numbers of new foreclosure filings have fallen as compared with the numbers reported in 2009 or 2010, but that doesn’t mean the foreclosure crisis is over.
Last January, the Treasury Department’s deputy assistant secretary for financial stability, Mark McArdle told CBS MoneyWatch that although HAMP has helped 1.5 million homeowners avoid foreclosure, “the effort isn’t complete.”
“While the housing market has recovered in many parts of the country, several areas and states are still struggling, and we will continue to help homeowners and communities in those places still recovering from the housing crisis.”
McArdle said that 11 months ago, and the “effort” certainly hasn’t been completed since then, but regardless, HAMP is ending this year.
Considering all the media chatter about how the foreclosure crisis has ended, it’s remarkable to consider that according to RealtyTrac and CNBC, this past October, there were 28 states and the District of Columbia that posted year-over-year increases in foreclosure activity… including:
- New York, which was up by 10 percent.
- Pennsylvania, which was up 20 percent.
- Ohio was up by 4 percent.
- Georgia up by 22 percent.
- Virginia up by 15 percent.
- Massachusetts up by 11 percent.
- Arizona up by 17 percent.
- Indiana up 3 percent.
- Wisconsin up 3 percent.
- And Colorado up by a whopping 64 percent.
October’s year-over-year spike was the largest monthly increase since August of 2007. According to Diana Olick of CNBC…
“The number of properties with a foreclosure filing, which includes default notices, scheduled auctions and bank repossessions, jumped 27 percent in October (2016) compared with September, according to a new report from Attom Data Solutions.”
Looking at RealtyTrac’s foreclosure chart for 2016, it appears that we still had almost a million foreclosures this past year. Yeah, it’s not two million or four million, but it’s still a million, which works out to 2740 a day, 365 days a year… and seems like too many at least to me.
I don’t know… call me crazy but none of those things gives me the indication that the foreclosure crisis is anywhere close to over. (Here’s a report, “Underwater America,” published by academics at U.C. Berkeley, that you might want to look at.)
But regardless, HAMP is ending this year.
The good news, however, is that the end of HAMP does not necessarily mean the end of loan modifications.
Last week, Fannie Mae and Freddie Mac announced a HAMP replacement called the “Flex Modification” program, which Fannie says, “leverages components” of HAMP with those of Fannie’s “Streamlined Modifications.”
Fannie says that the Flex Modification program was designed with “input from a wide range of industry participants as well as lessons learned from earlier programs.”
The expectation is that eligible borrowers will be able to have their monthly mortgage payments reduced by 20 percent, and Fannie says that most homeowners who are at least 60 days delinquent should be eligible for the program… in certain situations those not yet 60 days delinquent may also qualify. (If you’re more than 90 days delinquent you may not even have to submit much in the way of documentation to get your loan modification approved under the Flex program.)
Bill Cleary, Vice President of Single-Family Servicing Policy at Fannie Mae said the following…
“The Flex Modification is an adaptive program that will allow us to continue to assist struggling homeowners in a changing housing environment and simplify the process for servicers to deliver those solutions. We believe the program is flexible to adjust for regional and even local differences in housing. It provides the greatest amount of assistance to those areas in need.”
So, that covers Fannie Mae and Freddie Mac mortgages going forward, but if your loan was securitized and is owned by a trust… in other words if yours is not a Fannie or Freddie loan… then what?
Well, even without HAMP, you can probably still get your loan modified… probably.
However, without HAMP’s guidelines to rely on in place, it’s likely to be harder for homeowners to know what to expect in terms of qualifying for a loan modification or what terms will be offered by the servicer, assuming a modification is approved. You see, although HAMP was not great by any means, it wasn’t nothing either.
Here’s what I can do to help…
We’ve learned a lot about loan modifications over the last eight years and there are tools available today that weren’t around back in the early years that can be helpful.
- Knowing whether your trust is modifying loans – With HAMP gone, you won’t know for sure whether the trust that owns your mortgage is modifying loans… or what types of modifications are currently being done by that trust… or whether any restrictions are in place that could prohibit your loan from being modified as you’re hoping it will. Getting this information isn’t free, but it’s also not expensive. Here’s a link to more information on this topic: The Trust Modification Analysis. Or, you can email me at: email@example.com.
- If your loan was Fannie Mae or Freddie Mac, but it was sold to another investor, as many Fannie and Freddie loans were over the last few years, we can show you how much the investor paid for your loan… and how much Fannie/Freddie lost. Knowing that information can be helpful when trying to get a short sale approved or a loan modified.(If you want to know whether your loan is owned by Fannie Mae or Freddie Mac, here are links to their sites where you can enter your information and find out in a minute or two. Fannie Mae Freddie Mac)Or, if you’re looking to purchase a foreclosed property/REO that was owned by Fannie or Freddie, you can find out how much Fannie/Freddie lost on the property, or how much the note buyer paid for the loan… which can help you negotiate a fairer price.Here’s a more on this topic: How Much is Fannie/Freddie Losing?
- I can also help answer questions or review your numbers to make sure you’re not submitting something that won’t be approved on its face. Submitting an application that shows your income isn’t sufficient simply isn’t productive, and there are many areas like that where you can screw up and not even realize it.Here’s a link to an article I wrote a couple of years ago, but is still relevant today if you’re trying to get a loan modified: What I know about Loan Modifications. And you can email me at: firstname.lastname@example.org.
- If your loan is owned or serviced by Bank of America, Ocwen or Chase… and your “stuck,” meaning that you haven’t been able to get your loan modification approved after trying more than once, send me an email at: email@example.com and tell me what’s going on. I can often help get your application un-stuck and reviewed by a more senior manager.
GETTING MY HELP IS FREE, by the way.
YOU CAN EMAIL ME AT: firstname.lastname@example.org
For whatever it’s worth, I’ve been able to successfully help the vast majority of the homeowners who have contacted me over the last eight years. But, to be entirely candid, I won’t be able to offer to help homeowners in this way forever, so if you’re struggling now, email me. If I can help… I will.
Below I’ve provided letters from some of the real homeowners that I’ve helped get through the loan modification process.