Yesterday, the US Treasury Department announced that out of 4 million eligible borrowers, 759,058 trial mortgage modifications have begun under the Home Affordable Modification Program, but only 31,382 have been locked in for the long term. Bank of America, the biggest mortgage lender in the country, has made only 98 HAMP mods permanent.
Treasury Homeownership Preservation Office Chief Phyllis Caldwell stated, “Our focus now is on working with servicers, borrowers and organizations to get as many of those eligible homeowners as possible into permanent modifications.”
Others aren’t as sanguine in light of the 8 million to 13 million foreclosures are expected to take place over the next five years, according to the Congressional Oversight Panel for the $700 billion bank bailout program. In his opening remarks in a hearing on HAMP this week by the House Financial Services Committee, Chairman Barney Frank (D. Mass.) criticized the Obama administration’s efforts, ”We have a great frustration with the failure of the combined efforts of elements of the federal government to make a substantial impact on the foreclosure crisis.”
In the hearing, others testified that the program is falling short in addressing current causes of foreclosures such as high unemployment and a growing number of payment resets on complex mortgages that weren’t fully understood by home loan borrowers.
Anthony B. Sanders, Professor of Real Estate Finance at George Mason University, blamed the continued high number of mortgage delinquencies on negative home equity. He stated that 25 million homeowners are soon expected to be underwater with their mortgages.Dr. Sanders testified that home loans with 125% to 150% loan-to-value ratios are very difficult to modify.
Treasury Assistant Secretary for Financial Stability Herbert Allison testified that the newly launched Mortgage Modification Conversion Driveshould help, since it is increasing loan servicer communication and accountability, while producing a new set of web tools for homeowners atwww.makinghomeaffordable.gov
In other news yesterday, foreclosure filing fell 8% from October to November for the least amount of foreclosure activity since February.
What can you do if you’re in a trial HAMP mortgage modification?Remember, that the period is designed to give you the breathing space you need to meet your bills, and gather all the paperwork necessary to make your loan modification permanent.
- It is vital in these first three months that you cut your other expenses to the bone so that you make every home loan payment on time. According to the ranking Republican on the House Financial Services Committee, Shelley Moore Capito, “JP Morgan Chase recently disclosed that in November close to twenty five percent of their trial modifications failed to make the first payment, and nearly fifty percent of borrowers failed to make all three payments.”
- Stay on top of your situation. If you are in a trial loan modification, you have three months to solidify your position. When you call your servicer ask for the names of everybody with whom you speak, and write them down. By requesting a spelling, you are serving notice that you are paying attention. Get direct phone numbers and email addresses. Take extensive notes about what was told to you and when things are supposed to happen. Follow up with a phone call and email if you don’t hear back from the servicer or get needed paperwork at the time specified.
- Try to picture the scene on the other side of the phone. Thousands of calls come in daily to overworked mortgage loan professionals. Nothing happens automatically. It is all too easy to misplace paperwork, so be proactive. Nobody cares more about your keeping your home than you do.