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  • Both the media and homeowners throughout the county are complaining about the results of Obama’s main mortgage modification program, the Home Affordable Modification Program. The program is simple, at least in principle. The idea is to work with banks to help homeowners lower their monthly mortgage payments to an affordable level. To qualify borrowers must pay three monthly payments on time as part of their three-month trial. If they fulfill this and other
    requirements they can qualify for a permanent loan modification.

    So what are the results? What do the figures say? Is it a big success or a huge failure?

    The answers to these questions depend, of course, on your point of view and your expectations.

    If you expected HAMP (Home Affordable Loan Modification Program) to save every mortgage at risk of foreclosure, then it has been a failure. Over 277,000 homeowners have started the HAMP program and then dropped out during the three-month trial. That is around 23 percent of homeowners that have joined since the program started.

    The counter-argument is that bailing out every homeowner facing foreclosure is neither realistic nor desirable. Many homeowners simply own homes they cannot afford. In this case, loan modifications will simply prolong the inevitable. The rules of HAMP try to weed out these mortgages before the trial stage, but some are bound to squeeze through. Another way of looking at the data is that over 25 percent of homeowners who join the program are receiving
    help. According to Treasury, on average, homeowners in the program are paying $516 less every month. For those who did benefit from these saving the program is working admirably.

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    A major issue with the program has been delays and bureaucracy. Countless stories talk about banks asking for the same documents several times, stalling replies to modification requests unnecessarily and losing documents.

    A recent survey showed that a big problem with banks, which has made things worse, is that banks would allow customers to provide their income without confirming it.

    Companies like Bank of America and Wells Fargo that didn´t confirm the income of their customers and later had to drop the loan modifications due to errors have a less than impressive loan modification success rate. However, other banks that are stricter with their customer selection are having much better results.

    The bottom line is that government cannot help everyone so focusing on the candidates with the best chances of paying their mortgage makes sense.

    If you cannot afford a mortgage you can opt for a foreclosure alternative, such as a deed-in-lieu of foreclosure or a short sale. Homeowners that choose this route can apply for a $2,000 grant to help with relocating costs.

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