Mortgage Experts See HAMP Not Halting St Louis Refinancing Foreclosures
With the large amount of reported failures of the federal plan known as HAMP, inside senior legislators seem to be jumping on the band wagon showing their new found pessimistic ideas on where this program may be headed.
There were letters recently shuffled among one main senator and Neil Barofsky, special inspector general for the Troubled Assets Relief Program (TARP), regarding the matter of HAMP with Barofsky saying that over one-and-a-half million or so mortgage owners would get any type of mortgage aid.
But the sobering news is that approximately 4 million Americans including St Louis home loan owners that actually must have this federal help. Yet, most experts are despondent at the reality of this number being accomplished.
The reason for this dismal outlook is that fewer than 200000 or five percent have actually advanced from the testing plan into a permanent modification status.
But if things couldn't be worse, the inspector general's release warned that many borrowers are at danger of re-defaulting on their St Louis mortgage loans even after acquiring help under the federal program.
Again the critics are coming out of the wood works suggesting that these homeowners are irresponsible. But the verity of the matter is, many still owe more money than what their house is worth not mentioning that others have second mortgages.
Without veering off to a great degree, I think its good to mention the abominable acts of not just the huge insurance and banking leviathans but the average person who bought a home they knew they just were not able to afford and did it by taking the only type of loan that could deed them this undeserved asset. Then you have the pure fraudulent acts of those who knowingly lied on their stated income application. Years later, these things have come to be known as "liar loans."
Getting back to the facts, Barofsky then displays his further skepticism basically stating that these loan modifications may not be the right program to continue offering. The Treasury department had other opinions as to the wide spread criticism.
In a long, drawn out reply included in the brief, Herbert Allison, assistant Treasury secretary for financial stability said the program "should be measured by how many eligible homeowners are able to avoid the pain and stigma of foreclosure by lowering their mortgage payments to affordable levels while either staying in their homes or transitioning with dignity to more suitable housing. The amount of permanent modifications is one element, but not the only element of measuring the success."
Whether this federal program meets its overall success or failure is second only to the fact that these key officials want us to view their fundamental beliefs from their viewpoint and no other.
Allison seems to want everyone to grasp that the important point is not the failing of HAMP, but that Barofsky is simply not measuring its lack of success in the correct manner.
Because Allison clearly points out that permanent modifications are really only one way to help suffering homeowners, this somehow implies that he himself doesn't firmly believe his earlier comment.
We cannot ignore the fact that these services are also offering numerous foreclosure prevention initiatives such as short sales as realistic alternatives. It is sad that many of these consumers both nationally and locally can no longer measure up financially for any type of St Louis refinancing options.
Yet, most people who have been following this program from its inception were spoon fed the amazing idea that permanent loan modifications through HAMP was the greatest and perhaps the only way the country would see this overwhelming amount of foreclosures go away.
And as we are finding out, a lot of these modifications did not include a reasonable principal reduction, which means in all likelihood, they will continue to fail.
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