Obama’s Making Home Affordable Program helps few homeowners find permanent solutions because banks profit from foreclosure. Homeowners should not give up.
Many people believe that President Obama’s Making Home Affordable Program (HAMP) is helping fewer homeowners than originally hoped. According to Ariana Eunjung Cha and Dina ElBoghdady in the January 13, 2019 article "Mortgage Investors Ramping up the Pressure on Big Banks", early in 2009 the Treasury Department announced that the Making Home Affordable Program would help three to four million homeowners reduce their monthly payments to an affordable level; however, "through the end of November , fewer than 550,000 permanent loan modifications had begun, the GAO [Government Accountability Office] said."Cha and ElBoghdady go on to state that the GAO also reported that "the number of started trial modifications declined from about 118,000 in December 2009 to about 31,000 in November , and fewer than half of the modifications begun on a trial basis have led to permanent modifications."
Even though many homeowners are put into trial Making Home Affordable Programs, thousands of homeowners complain that a few months after making reduced monthly mortgage payments their banks avoid permanent loan modifications. By now, it’s no secret that home loan servicers are making money on foreclosures rather than approving home loan modifications.
A report published in in the October 20, 2009 article "Banks Really Do Prefer Foreclosure" by the National Consumer Law Center states there is no mystery to why loan servicers avoid modifying troubled mortgages. Servicers are not losing money on foreclosures, so they don’t have any incentive to help homeowners stay in their homes through the HAMP program. In almost every case the loan servicer does not own the loan. Instead, investors lose their money, and homeowners lose their homes.
Homeowners who are tired of sending the same paperwork again and again and getting the runaround from their banks can complain about the home modification process. Contact the Office of the Controller, and file a complaint. Homeowners can also complain to their state’s Attorney General and Department of Consumer Affairs. Homeowners should not walk away from their home because the loan modification process is so frustrating. Banks are more than happy to see homeowners turn in the keys to their homes; then the banks make a nice profit.According to Jan Falstad in the November 14, 2019 article titled "Foreclosure: The Right Questions", it’s a little-known secret that banks can foreclose on a home and get back as much as 85 percent in combined insurance and federal subsidies on their losses after selling a foreclosed home. Then the bank makes 10 percent selling the bad debt to a collection company, and it writes off another 35 percent of the loss on its taxes.
Mortgage Loan Modification to Avoid Foreclosure
Mortgage Complaints – Federal Loan Modification
Help With Foreclosure – Government Aid Preventing Foreclosures
Thousands of homeowners have had help getting HAMP loan modifications approved with assistance from the Neighborhood Assistance Corporation of America (NACA). NACA is a non-profit, HUD certified counseling agency that advocates for homeowners attempting to secure home loan modifications.However, the odds for getting a loan modification approved through NACA, while higher than with most agencies, are overall still low. Homeowners complain that the paperwork process is arduous and time-consuming, even with the help of the NACA home save program. Many people who attend the NACA Save the Dream Tour leave with just a trial loan modification that never turns into a permanent loan modification.
In the December 30, 2019 article "States Try to Force Mortgage Workouts", Anthony Klan says that some states are forcing lenders and borrowers to attend mandatory mediation meetings to settle face to face instead of going to court. Klan writes, "The compulsory negotiations, assisted by a third-party mediator, are producing loan modifications and other settlements at substantially higher rates than voluntary-mediation programs that have been implemented in some states."According to Klan, twenty states currently offer some type of mediation for homeowners in foreclosure, but only three states and two cities make meetings mandatory. Fortunately, over 60 percent of homeowners who completed the mandatory mediation program have received permanent solutions that lowered their monthly mortgage payments, so they could afford to stay in their homes.
Still in the meantime, millions of Americans are leaving their homes because banks are neglecting to streamline the HAMP process and stop the paperwork madness. As long as banks can make a profit foreclosing on people’s homes, fewer and fewer homeowners will receive permanent solutions through the Obama Making Home Affordable Program.Cha, Ariana Eunjung and ElBoghdady, Dina, "Mortgage Investors Ramping up the Pressure on Big Banks", . January 13, 2011.Datko, Karen. "Banks Really Do Prefer Foreclosure." MSN Money. October 20, 2009.Falstad, Jan. "Foreclosure: The Right Questions." . November 14, 2010.Klan, Anthony. "States Try to Force Mortgage Workouts." December 30, 2010.